Twitter   Facebook

AMT Public

join amt
Putting the life back into our towns and cities

Encouraging shoppers to spend in your high street

By • Dec 9th, 2009 • Category: News

In light of the publication of our Policy Position Statement on Prosperous Places (opens Word doc), and as the credit crunch continues to bite, we thought we’d explore how some towns are developing local loyalty schemes to tempt more shoppers into their town centres.

Follow the leaders

The big retailers – the likes of Tesco, Boots and Waterstones – have, for years, operated loyalty schemes, offering their customers incentives to remain loyal and choose their shops over others.  These schemes are not restricted to individual stores. Both the Nectar points and the Air Miles initiatives have seen the creation of partnerships between major retailers and service providers and credit cards companies.

Local loyalty

Where do market towns fit in? According to the New Economic Foundation, small shops are closing at a rate of 2000 a year. Yet it is these local retailers that are more likely to provide jobs for local people, spend money locally and provide local services. So how can we attract more shoppers into our local shops?

Some market towns are tackling the challenge by following in the well-trodden footsteps of the retail giants and developing their own incentive schemes through the collaboration of independent stores.  By working together, shops can offer their own individual benefits to customers and encourage those customers to come to the high street rather than shopping elsewhere.

More competition for sales

Independent stores on the high street are facing increased competition, not only from larger superstores and out-of-town shopping centres, but also online shops, which do not have the overheads that an on-street shop does and as a result can sell their goods at reduced rates.  A recent survey by Ebay has suggested that by 2010, around fifty percent of new retail ventures will be operating online, and the level of high street sales will fall by seven percent as more and more people switch to online shopping.

But there is of course still a need for high street shopping – consumers like to be able to browse products and services, and handle or try on the product.  Many people like to buy a product there and then and take it home immediately, some do not have the means or confidence yet to purchase online, while others don’t wish to risk buying luxury items online from potentially unknown sources. Above all, people enjoy shopping as a social activity.

The value of customer retention

It is vital that high street shops take steps to fight back against increasingly aggressive competitor strategies.  Encouraging locals to shop locally on a regular basis, and to support their high streets, is fundamental.  Customer retention is not only a cost-effective and profitable strategy, but in today’s business world it’s necessary. This is especially true when you remember that 80% of sales come from 20% of customers and clients.  Never forget that it is more costly to acquire new customers than it is to retain existing ones who already know about you.

Working together to tempt shoppers back to the high street

While good overall service is the best way of generating customer loyalty, sometimes new relationships can be strengthened or old ones refreshed using customer loyalty schemes.  Such schemes enable a retailer to offer fixed or percentage discounts, or extra goods or prizes to reward customers for behaviour that benefits their business.

In a town setting, creating a loyalty system gives retailers the ability to do things that they might not necessarily be able to do or afford on their own.  It can raise a town’s profile and create an attractive and viable shopping experience for customers within a distinct geographic area.

For example, a tea shop might offer a complimentary drink and piece of cake every tenth visit.  A butcher might offer a discount after a customer has spent a certain amount in store over a period of time.

The benefits to the retailer include:

  • Increased publicity and marketing for retailers, and indeed the town, especially if local press is involved as a partner
  • Increased awareness of customer spend and habits as some loyalty schemes enable greater data collection
  • Increased retention of existing customers and sharing of customer base where the shopper is shopping in other shops within the scheme, and learns of your shop via them

The benefits to the customer include:

  • Actual financial rewards for shopping locally
  • Satisfaction of contributing to and sustaining the local town and economy
  • Increased potential for new shops to establish leading to greater consumer choice and a more thriving high street

There are many examples of loyalty schemes, often funded and run in different ways.  Here is an overview of three schemes in operation.

Faversham Rewards – Key points

Faversham opted for the loyalty card offered by Savvy UK Ltd and launched the card in summer 2009.  Each business buys a bundle of the credit card sized loyalty cards from Savvy, and these are branded with their shop logo.  It’s £2.50 per card and they normally buy 100 each to begin with.  The shops also rent a card-reader from Savvy, which uses oyster technology to capture information about the shopper and store how much they have spent so far.

The shops sell the cards to customers for £5.00 each.  The shops then decide on their ‘offer’ and this is put on the Faversham.org website and in literature.  Shops may also do their own promotions in store.  A shopper may use their card in a shop and will collect points on their purchase.  Once they have enough points from that shop, they can take advantage of offers, such as discounts.

Funding for the project has come from a number of sources – the Regional Development Agency and the local authorities and the Faversham Economic Partnership. The funding has paid for a part-time co-ordinator who has set up a business forum that meets every 2 months.  This forum agrees how the scheme might be progressed, and shops share knowledge and expertise.  It is hoped that this forum will enable the continuation of the scheme beyond 2011, when Ima may no longer be in post.

The loyalty card can be purchased by anyone, not just residents.

There is evidence that businesses are getting new custom from the scheme – for example where a shopper has the card and has started shopping at other shops in the scheme to take advantage of loyalty points.

Because the businesses have had to make a financial commitment to be in the scheme it is hoped that this will give the scheme more stability and sustainability in keeping those businesses involved.

Each business receives regular businesses reports so that they can see exactly what the scheme has given them.

18 businesses originally signed and since then, four more have joined – that’s an average of one shop per month.  Currently around 1300 people have purchased cards and feedback is very positive.

Caterham Shop Smart

Launched in summer 2009 the scheme offers free cards to the public, who in return register basic details.   The free aspect aims to reduce barriers to entry to the scheme for shoppers.

Signed-up customers receive credit-card-sized cards and key fobs which can be shared among couples, for example.  3,000 cards were originally ordered based on 10% adult penetration target for Town + Hinterland.   After 3 months the scheme has 1,500+ members, from around 1,000 of these registered cards. Sustaining now with 45 shops and 1,500 members after 3 months we have momentum and credibility.

The cost to the shops is affordable. Shops are charged £50 per shop for 1 year which includes a listing on routine leaflets and a page website entry each on the new town website hub.

The scheme has been funded by local authority grants, sponsors and the shops themselves.  Each shop or businesses considers what loyalty offer to make.  Currently there is a mix of discounts and loyalty offers.  A town points scheme was considered but was too hard to implement and the administration proved to be a barrier.

To make the scheme viable for the public meant marketing was key and a website hub was created.  The Hub is crucial as it is where shop, town, business, and member information is stored.  It can be updated easily and is accessible to all – a virtual town.  Footfall on the website leads to real visits.

The hub was created by customizing some available software, originally for a single on-line shop.

Overall, the loyalty scheme has created a buzz and after just 3 months shops were reporting new faces, use of the cards and more shops and members joining – mostly from referral now, which is a good sign.

The Lewes Pound

The Lewes Pound is more about creating a local economy (which will benefit the environment) and the loyalty element is one aspect of this.  The idea came about as a part of Transition Town Lewes, a community-led response to the challenges of climate change and peak oil.  Transition Towns seek to re-localise communities to build resilience in the face of these challenges, and the Lewes Pound is one of the ways to localise the economy.

The scheme is quite simple: exchange Sterling for Lewes Pounds at any of the 10 issuing points, use your Lewes Pounds for local purchases at a 1/1 ratio, and if necessary, trade them back into Sterling at any time.

The initiative was funded by local businesses with the support of the town council.  The first issue of the Lewes Pound (1£ note) was launched on the 9th of September 2008, and new notes (1, 5, 10, 21) were introduced on the 3rd of July this year.

The organisers were very keen to set up a paper currency because it provided a visible representation of the aims of the initiative.   Anyone who holds a Lewes Pound in their hands becomes part of a conversation about the benefits of local trade.  In the long-term, it is not unconceivable that the local currency can be used with a card, but that will only make sense once the scheme has a high number of users.

150 traders have signed up to accept the currency.  Residents don’t need to sign up, but there is a group of 300 people who have committed to using the Lewes Pound on a regular basis.

It cost roughly £4,500 for the initial run of 10,000 1-pound notes.  To date, there have not been any costs to the businesses or shoppers.

Advantages of the Lewes Pound: Helps build awareness about local sourcing, supporting local trade, reducing food miles; Builds community spirit; Increases trade for some traders; Brings tourists to the town. Disadvantages: The initiative is run by volunteers, and as such it is very difficult to get the most out of it. We are in the process of seeking funding to get more in-person support.

The organisers have supported numerous other communities in setting up their local currencies, including the recently launched Brixton and Stroud pounds.

Research project exploring loyalty schemes

amt-i, the research and consultancy arm of Action for Market Towns, has just published a report looking at the role of loyalty cards in market towns.  The research was sponsored by loyalty specialists Savvy UK Ltd.

The key conclusions from the research are:

  • Loyalty cards can either be implemented as a single initiative or can form one aspect of a wider “Shop Local” scheme.
  • To achieve loyalty, schemes must motivate people to return by offering a future reward, encourage higher spend on that visit and track customer spend to generate data to be used for targeted marketing.
  • A blend of discounts/promotional opportunities alongside longer-term loyalty schemes to motivate repeat spend is the approach adopted by large national retailers. This important lesson should be adopted by market towns.
  • Over time, schemes that rely purely on discounts are more likely to suffer decline in interest from member businesses and many stop promoting the card.
  • To remain viable, cards that only offer a discount must “evolve” into true loyalty cards which track and reward repeat purchases.

Download the Loyalty Card in Market Towns Report here {opens pdf in new window}

If you would like to discuss any of the report findings or need help setting up your own local loyalty card scheme, email business@towns.org.uk.

Shop Local Event, North Yorkshire, February 2010

AMT ran a shop local seminar and workshop as part of the North Yorkshire Towns Alive programme of events in February 2010.

The event attracted interest and delegates from across the country. Towns gathered to hear about the successes and problems of existing loyalty card schemes and shared ideas and plans for starting or expanding loyalty schemes in their own towns.

Tagged as: , ,

is Alison is the Policy Manager at AMT. She graduated from Canterbury Christ Church University College in 2000 with a BSc in Tourism with French and then became the Tourism Officer for the east London Borough of Newham. She successfully launched the Borough’s first Visitor Strategy. In 2002 Alison moved to Chichester having accepted a new job as the Tourism Manager for West Sussex County Council, where she stayed for 4 years. Her next role was in the central Government Department for Communities and Local Government (formerly the Office of the Deputy Prime Minister) where she was responsible for liaising with external stakeholders on local government issues, and also worked on the Local Government and Empowerment White Papers. At AMT, Alison will be working with members and key strategic partners to develop and influence central and regional policy relating to market towns. She works Monday afternoons, all day Thursday and Friday mornings, and can be contacted on 0787 659 8957 or by email at Alison.eardley@towns.org.uk.
Email this author | All posts by

Post to Twitter

Comments are closed.