As Americans get thrifty , retailers are turning to the tried-and-true strategy of loyalty programs. Companies like Costco, Starbucks, and Dicks say rewards program members drive the highest sales. American shoppers are running out of steam — rather, some of them are.
Whether you call this split (as some economists do) bifurcated, divergent, or K-shaped, the idea is that wealthier households are still spending strong while lower-income ones are dialing back. So, what's a retailer to do when confronted with such a shift? Follow the money, of course. For companies like Costco, Starbucks, and Dicks Sporting Goods, which have robust and well-established loyalty programs, a common thread is that rewards members are the biggest spenders.
Now, some less-obvious names, like Etsy and Tractor Supply Co., are launching or revamping their loyalty programs as another way to get cautious shoppers to buy more. "Consumers today are mindful about when, where, and how often they spend due to continued economic uncertainty," Jennifer King, content manager at eMarketer, wrote last month.
"For price-conscious consumers, loyalty programs provide opportunities to spend more comfortably thanks to discounts and deals." Costco says its Executive tier members, who pay twice the annual fee of Gold Star members and get 2% rewards on purchases, represent less than half of the total membership base but are nonetheless responsible for more than 73% of worldwide sales. That sounds like a version of what St.