Price Edges Out Brand Loyalty as Consumers Feel Financial Pinch

Are we loyal to retailers or the brands they sell? It’s a simple question with complex answers.

For as long as there have been stores, people have had their favorites. With the expansion of digital retail loyalty programs in the past two years alone, retailers are providing even more reason to shop consistently with those we already lean towards.

But new data finds that loyalty isn’t always driven by brand, and that can make a big difference.

To illuminate, the study Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022, a PYMNTS and Toshiba collaboration, analyzes where consumer allegiances truly lay — with their favorite retailers, or the products — and the role pricing plays in that balance.

Focusing on two of the largest sectors, the research looked at where consumers are shopping and found that 82% of grocery shoppers and 76% of pharmacy customers do their shopping primarily in store. Only 18% made grocery purchases mainly online, and 22% did so for pharmacy purchases.

Loyalty is flexible, depending on where you shop and what you’re shopping for. In the study more respondents cited proximity as the most important factor driving loyalty to a pharmacy (41%) than price (16%). By comparison, more grocery shoppers listed price (37%) as a decisive factor.

Get the study: Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022

Two Different Shoppers in One Person

The same individual is not necessarily the same shopper in different retail settings, and that ends up having an outsized effect on where they spend — or don’t.

Per the study, “grocery shoppers are nearly twice as likely as pharmacy customers to say they are more loyal to their favorite merchant than their preferred products.”

Our survey revealed that 61% of pharmacy customers stated that they were more loyal to the products that they wanted than the pharmacy they patronized, while just 35% of grocery shoppers said the same about their go-to grocers.”

For the pharmacy version of the same consumer, proximity is what matters most, driving 41% of loyalty as compared to pricing, which just 16% of respondents called out as the deciding factor.

“Consumers who are more loyal to products than their pharmacy are likely to be motivated by better prices and cite convenient digital payment or fulfillment features as the driving factor behind their loyalty,” according to the study.

The study added that “product-loyal consumers tend to seek out and purchase the specific products that they want wherever they are better priced rather than only purchasing the products that happen to be available at their favorite stores.”

Get the study: Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022

Digital Seals Loyalty Bonds

While price — not brand or merchant — is more decisive in the end, especially in an inflationary economy, consumers weigh other factors when deciding where to spend.

Hint: It’s digital.

As the study notes, “Consumers are generally motivated by price — one of the top two influences on consumer choice — but all consumers report that their ongoing loyalty is connected to features apart from pricing. Consumers cited a range of features that would boost their loyalty to a merchant, and most are offered by the most popular retail brands.”

Grocery consumers are juiced by lower prices and discounts (77% and 52%, respectively) along with in-stock status (51%) as the top three loyalty-enhancers in that milieu.

Additionally, 33% of grocery shoppers and 30% of pharmacy shoppers say online availability helps them decide, as does having an in-store mobile app (19% grocery, 17% pharmacy).

These capabilities require robust digital solutions — what we call being “digital-ready.”

Factors that consumers feel make a retailer digital-ready are less variable than price or brand.

For example, digital inventory management — the ability to check inventory before going to the store — is highly valued by 51% of grocery shoppers and 47% of pharmacy shoppers. Simple online purchasing does the trick for 23% of grocery shoppers and 26% of pharmacy patrons.

Also popular are flexible digital payments options, getting the nod of approval from 33% of grocery customers and 30% of pharmacy shoppers. In-store mobile app availability is the other big factor, with 19% of grocery customers and 17% of pharmacy customers saying so.

Get the study: Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022