The preliminary results from Black Friday retail sales are in—and they reveal some welcome news for the battered retail sector. While online retail sales continue to skyrocket, there’s good news for brick-and-mortar retailers as well: preliminary tracking data from GlobalData predicts that Black Friday sales have risen the most since 2011, while the National Retail Federation (NRF) is predicting a 4 percent increase in sales over 2016. How are retailers successfully making all this hay? As Bloomberg News reports, they’re doing it by leading with their loyalty programs to attract and retain best customers. Welcome to the retail loyalty renaissance.
By Rick Ferguson
Consider U.S. department store retailer Kohl’s, Inc., which over the past several years has served as one of the primary poster children for the struggling department store sector. The retailer reported fairly ecstatic news on Black Friday, as this money quote from Fortune Illustrates:
“Kohl’s, coming off a better-than-expected third quarter when comparable sales edged up 0.1%, launched some Black Friday deals for one-day only on Nov. 1 and then a new set of Black Friday deals online on Monday, three days before Thanksgiving. Those moves have apparently paid off. Kevin Mansell, Kohl’s CEO, told Fortune on Friday morning that sales—and crucially, store visits—have been strong so far over this Thanksgiving-to-Cyber Monday weekend, and ‘well ahead of last year.’”
While Mansell highlights increased store hours as one of the factors driving sales, he also highlights the importance of the retailer’s Kohl’s Cash loyalty program, which he says will result in people “earning a lot more of Kohl’s cash and that puts us in a position in December to get them back into stores again.” Indeed, as Bloomberg News points out, Kohl’s has effectively staked their entire turnaround strategy on their loyalty program. Money quote:
“Kohl’s entire holiday strategy this year is centered around the Menomonee Falls, Wisconsin-based chain’s loyalty program. In a cinematic spot that began airing this month, Kohl’s pushes the tagline, ‘Give Joy, Get Joy’—if customers spend on merchandise, they’ll receive financial rewards through the Kohl’s cash loyalty program. ‘Competition is very stiff,’ says Gabriella Santaniello, founder of retail research firm A Line Partners. ‘They need to offer something to the customer that keeps them coming back to your store.’”
Bloomberg also notes that specialty apparel retailer Hollister, owned by Abercrombie & Fitch, credits its 8 percent same-store sales growth last quarter in part to the brand’s 8 million-member Club Cali loyalty program. A&F CEO Fran Horowitz said in a recent conference call that “Our loyalty club continues to provide a wealth of insight,” on the company’s best customers.
With Kohl’s rivals such as Macy’s and Sears also leading with their loyalty programs as they attempt their respective turnarounds, it remains to be seen just how great an impact these retailers’ respective loyalty programs will have on 2017 holiday sales, and on their turnaround efforts overall. What we know now is that early returns look promising, and that means good news for the retail sector. For all the credit given to Amazon and its Prime program for crushing retail competition, there is a silver lining to the Amazon effect: Amazon has forced retailers to innovate, and to refocus their efforts on their own customer relationships. If the end result is a stronger, healthier retail sector, with best customers rewarded and recognized at every stage of the buying cycle, then perhaps the entire retail sector will owe Amazon a debt of thanks.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and a Certified Loyalty Marketing Professional.