Australian consumers using loyalty programs to save money: IAB

As inflation and the cost-of-living crisis continues to impact Australian consumers, nearly two thirds of shoppers are using loyalty programs to save money.

The IAB and Pureprofile Australian Ecommerce Report 2023 showed that 90 percent of Nine in 10 online shoppers remain signed up to at least one shopper rewards program.

Fifty-two percent of online shoppers pay a fee to subscribe to a retail loyalty program such as Amazon Prime, eBay Plus, Wesfarmers OnePass, Woolworths Delivery Unlimited or Costco Membership.

The report found that while these loyalty programs provide retailers with rich behavioural data, trust, transparency, and a clearly articulated value exchange with benefits delivered to consumers are key to successful retail marketing.

Concern with how retailers use shopper data increased over the last year with 60 percent reporting some level of concern about how data was collected via loyalty cards (up from 51 percent in 2022) and 60 percent concerned about data collected via transactions (up from 55 percent in 2022).

For consumers subscribing to product delivery services such as meal preparation kits, the report noted that has been an increase in the number of people indicating that a key reason for their patronage is related to price assurance and knowing how much the product will cost (up from 35 percent to 45 percent) which plays an important role in budget planning and management.

Gai Le Roy, CEO of IAB Australia commented said Australian consumers are increasingly enjoying a mix of online and in-store shopping, but its clear retailers face a new set of challenges with shoppers who are price sensitive seeking value for money in their brand choice. 

“We know that constant discounting and undercutting competitors is not a long-term strategy, but retailers will need to consider how to offer a clearly articulated value exchange for consumers,” she said.

The report found that 67 percent of consumers reporting convenience is still the number one reason for purchasing online, however with recent rises in the costs of living, the report also found consumers are increasingly focusing on discounts, loyalty programs and seeking price comparisons to minimise unexpected price increases when they shop online. 

According to the report, retailers must look to win over cost-of-living pressured online shoppers by ramping up value propositions and providing relevant shopping experiences that are suited to the current economic climate.