Victoria’s Secret is taking a more intimate approach to shopper loyalty, aiming to keep budget-conscious shoppers spending with more personalized messaging as they tighten their purse strings on luxury lingerie.
In its first-quarter fiscal 2024 earnings results reported Wednesday (June 5), the lingerie, clothing and beauty retailer reported a 3% dip in net sales compared to a year ago and a 5% drop in total comparable sales amid a challenging consumer environment, while its digital channels outperformed brick-and-mortar stores.
The company is taking a multi-pronged approach to loyalty, looking to get more targeted to bring shoppers back and drive engagement more effectively.
“On loyalty, … we moved from a credit card arrangement to a multi-tender arrangement, and that’s built our business to about 80% of our sales coming through that device and something like 30 million customers taking advantage of that, which gives us a tremendous platform on which to learn,” CEO Martin Waters told analysts on an earnings call. “… The future of marketing in this country and around the world will be personalized.”
Consumers want more relevant targeted offers, per the PYMNTS Intelligence study “Personalized Offers Are Powerful — but Too Often Off-Base.” The report surveyed more than 2,500 U.S. consumers about their perceptions of the personalized offers they get from merchants and the factors that could make them consider switching merchants. The results revealed that almost 83% of consumers are interested in personalized discounts and promotional offers. However, just 44% said the offers they have been receiving are pertinent to their needs.
“Having a relationship with customers where you understand their preferences informs the opportunity to give them a curated and individual experience, and that’s the new frontier for us,” Waters said during the call.
Merchants including Nordstrom, Albertsons and eBay, among others, are touting efforts to offer consumers more personalized shopping journeys. Plus, the rise of artificial intelligence is accelerating retailers’ efforts in the space, unlocking new capabilities and more opportunities to get hyper-specific with how the merchant communicates with the consumer.
“The advancements of machine learning and AI will help us crunch that data and bring better personalized offers,” Engage People Chief Technology Officer Len Covello told PYMNTS in an interview in December. “And the more devices we interact with, the more personalized that offer will be.”
Not all efforts in the space are successful, however, with even industry-leading players facing challenges. Starbucks’ AI-driven personalized rewards initiatives for boosting customer visits and spending, for instance, seem to be encountering difficulties, per the chain’s “disappointing” second-quarter fiscal 2024 earnings results announced in late April.
Moves to personalize come as consumers continue to feel concerned about their spending, cutting back on nice-to-haves so they can afford necessities. Findings from a PYMNTS Intelligence survey of more than 4,200 U.S. consumers for the “New Reality Check: The Paycheck-to-Paycheck Report” series revealed that 60% of shoppers reduced their nonessential retail purchases due to inflation. Moreover, half of consumers opted for less expensive retail merchants for the same reason.
By offering the right messaging, merchants aim to keep consumers shopping despite the overall environment of more conservative spending.
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