In today’s economy, where the cost of living looms large, retailers face a pivotal challenge: keeping customer loyalty. With consumers swayed by price, brand allegiance is crucial for retailers of all sizes to not just compete but thrive.

Australians are now meticulous with spending, cutting back on life’s little luxuries to ensure they can pay their bills. Adapting to these shifts is critical to the survival of retailers large and small.

For those grappling with declining sales, there’s hope. With the right strategies, retailers can rise stronger than ever. Let’s explore actionable techniques to navigate this dynamic market.

Understanding consumer behaviour

The first step to building loyalty with your customer base is to understand what makes them tick. What drives their purchasing decisions? Has their rent gone up this month? Do they have a family to support?

Monthly Household Spending data indicates a steady increase from April 2020 to April 2024 on essential goods and services. In the same period, non-discretionary spending has risen a total of six per cent, indicating that consumer purse strings are tightening. 

Cultivating a deeper understanding of your target market will enable you to refine product or service delivery to suit their needs. Take Budgy Smugglers, for example. In a fun play on classic Australian swimwear, Budgy Smugglers are loved by the everyday, laid-back Australian.

However, its laid-back approach to the quality of the product and customer service meant sales were slim. A shift in strategy to provide more customisable offerings shifted their sales from 20-30 per week to 80-150. Understanding its market has cultivated loyalty across Australia, and it’s now entering global markets like Europe and the US. 

To carve your niche and build lasting loyalty, align product offerings with market needs. Strategic targeting ensures sustained customer trust and satisfaction, securing loyalty for the long haul.

Harnessing technology for connection

Customers crave personalised experiences, evidenced by personalisation ranking highest in a recent Australian CEE (Customer Experience Enhancement) report. Retailers can achieve this connection by implementing technologies that form a single customer view. Leveraging a CRM platform is an effective way to do this.

A CRM consolidates customer data for tailored interactions and enhanced product offerings. Another technology that can help centralise your customer view is through marketing automation. This enables autonomous email marketing, social media posting and ad campaigns for efficiency and, more importantly, personalised customer experiences.   

Embracing omnichannel strategies is also essential. Beyond traditional outlets, social media offers retailers a vast audience — Australia boasts 20.8 million social media users. For instance, a boutique clothing brand could use Instagram not only to showcase new arrivals but also to engage directly with customers through comments and direct messages. By responding promptly and informatively, they foster a community and build trust, increasing customer loyalty.

Additionally, integrating online and offline channels enhances convenience. Offering options like click-and-collect or in-store returns for online purchases ensures a seamless experience. This omnichannel approach not only meets customer expectations but also strengthens brand presence across multiple touchpoints, driving engagement and sales.

Setting yourself apart

In today’s competitive market, traditional retailers must innovate to thrive. Yet, innovation alone isn’t enough without a focused personalisation strategy centred on customer loyalty. Aesop illustrates this well: each store is finely tuned to meet the unique needs of its local community, earning steadfast customer loyalty through personalised experiences.

Another key differentiator for retailers is investing in employee happiness. Reward and recognition platforms can enhance wellbeing as employees are acknowledged and compensated for their work, promoting a positive environment. Happy employees are the cornerstone of customer satisfaction and loyalty. A platform like Reward Gateway can offer this and a whole range of other employee benefits that can offer compelling discounts and benefits to help businesses acquire new customers, drive conversion and increase basket size.

The cost of living crisis in Australia has played a major role in altering consumer spending behaviours. To get ahead of the curve and stand out among the competition, retailers must be dynamic in their strategies, adapting to their target market’s values and expectations. Whether implementing new technologies to drive engagement or taking a more personalised approach to customer connection, retailers should prioritise approaches that lead to enduring loyalty. 

Daniele Iezzi is group retail director of APAC at Reward Gateway.