Foursquare report: Discount retailers earn high loyalty rankings

Dive Brief:

Old Navy earned the highest customer loyalty ranking among single-brand fashion retailers, and Kohl’s won the top loyalty ranking among multi-brand fashion retailers, according to the latest Foursquare Loyalty Index, a copy of which was emailed to Retail Dive.
Other names rounding out the top five among single-brand retailers include Jos. A. Bank Clothiers, Hot Topic, Rainbow Shops and Maurice's, all of which saw their loyalty rankings rise over the last year.
Retailers that ranked in the top five among multi-brand fashion retailers include, in order, Macy’s, T.J. Maxx, Ross Dress For Less and Marshall’s, with Nordstrom falling just outside that group at No. 6. The index also measured retailers of shoes and accessories, with Zumiez finishing first and Payless ShoeSource coming in second.

Dive Insight:

Many of the top-ranked retailers in the single-brand and multi-brand categories do not operate in luxury or high-end fashion. Instead, most are associated with discounts and deals.

That could mean that low prices and the promise of finding great deals could be a bigger factor in customer loyalty than ever. Foursquare isn't the only one to notice this recently, as an NRF Consumer View report last fall found that 89% of 3,000 U.S. adult surveyed shop at discount retailers. Price and bargains have always been important, but in recent years, many retailers have come to adhere to the notion that great in-store service experience, often enabled by the latest technology innovations, is what's key to strengthening customer loyalty.

Foursquare compiled the report by analyzing anonymized, pseudonymized or aggregated data from the foot traffic patterns of the millions of Americans who participate in Foursquare’s always-on panel, and the more than three billion place confirmations worldwide that it collects each month. It sought to measure frequency of visits per customer; the percentage of visitors who frequented a specific brand within a year; the percentage of a single customer’s total visits to one brand in a year; and finally, a "fanaticism threshold," defined as “the number of visits within a year required for a customer to be considered within the top 1% of those who visit a particular brand.”

The data suggests that many of those consumers return time and again to seek out good deals at stores known to offer them. It’s a trend Foursquare described as “Thrill of the Hunt” shopping, in which customers repeatedly visit certain stores in part because they “never quite know what amazing deals on designer items they might come across during any given store visit,” the report stated.

Also, the report suggested that the chaotic environments in many of these stores—as opposed to the sleek, simplified, high-tech-driven environment that might be found elsewhere—“may actually add to consumers’ sense of excitement (and overall shopping experience). Moreover, it makes these brands immune, in large part, to e-commerce and online competition from the likes of Amazon.”

That doesn’t mean retailers should swear off technology investment and simply focus on price. Fourquare pointed out that retailers such as Old Navy and Kohl’s were helped in the rankings by how they leverage their branded mobile apps to enhance the in-store experience.