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Can multi-brand loyalty programs save American malls?

Loyalty programs are a great way for retailers to encourage repeat business and, ideally build long-term relationships with customers. But in the digital age and the rise of e-commerce, it’s a challenge to incentivize repeat visits to brick-and-mortar stores—and especially those in malls where shoppers aren't drawn to the same mega-department stores that they used to be.

Market research firm ShopperTrak found that foot traffic at malls fell 14.6% during the 2013 holiday shopping season, even as overall retail sales increased 2.7% across other channels. And while this doesn’t necessarily indicate a comparable decline in sales, it almost certainly indicates a falloff in onsite discovery and impulse buying.

But rewards programs, too, face challenges. There are so many available that consumers have “loyalty fatigue,” according to Colloquy. The loyalty marketing consultant estimates that there are more than 3 billion loyalty program memberships in the U.S. today, and the average U.S. household participates in 29. But 58% of those memberships are inactive.

Retailers need to go beyond traditional rewards to attract users, according to a report from Boston Retail Partners. One answer is multiple-store programs; American Express’ Plenti, for example, allows shoppers to patronize multiple businesses, while Shopkick’s app rewards users for walking into partner stores, scanning product codes, and making purchases. And now, malls are getting into the act.

Place-based loyalty

Starwood Retail Partners recently launched the first known mall-wide, all-digital marketing, and loyalty program in partnership with online loyalty platform Spring. The program went live Sept. 2 at Starwood’s Chicago Ridge Mall, in suburban Chicago Ridge, IL, covering its more than 100 retailers, restaurants and other businesses.

The “Oh, So Simple Rewards” program will roll out to three more markets this year, and be activated at all 29 Starwood properties in 2016. Applying only to each user’s preferred local mall, the program will eventually blanket about 3,000 retail locations, tally 100 million consumer visits, and influence $15 billion in consumer spending.

While Spring drives rewards programs for individual local businesses across the country, Starwood’s program is its first mall deployment.

“The objective is to get people to the center, have them spend more time there, and have them spend more money with the merchants,” Jonathan Dyke, Spring cofounder and COO, told Retail Dive.

Shoppers at Chicago Ridge can sign up for Oh, So Simple Rewards at kiosks at the mall or online. They can then register as many Visa, MasterCard, or American Express credit or debit cards as they like to earn rewards for purchases made at the mall. Once a shopper spends $250 at Chicago Ridge stores, they earn a $10 statement credit, or can spend the earned cash value at a retailer of their choice.

Mall giant Simon also began testing new a multiple-retailer loyalty program at five of its high-end shopping centers last year. Members can sign up to win prizes at kiosks or through the Simon Rewards app, and earn points for each dollar spent at participating stores.

“We look at this as an opportunity to give our shoppers another reason to come to the mall,” Simon vice president of marketing Ed Vittoria told the Chicago Tribune. Retail partners “really like the increased traffic they get from this.”

Delivering personalized incentives

Participants in Starwood’s program also receive incentives to keep shopping.

“Consumers signed up for the program will literally earn cash rewards for shopping at Starwood malls, and will receive personalized offers from their favorite retailers,” Laurie Paquette, Starwood’s director of asset management, said in a release.

From the first time a shopper types in his or her e-mail address, they will start getting offers—perhaps a welcome e-mail or text, or $5 toward their first visit to the food court. Later, shoppers receive texts and e-mails telling them how close they are to their $250 cash-back goal, helping gamify the experience. “You are $50 closer to your goal—keep going!” a text might say.

Offers and incentives are tied to past experience to increase their relevance to specific shoppers.

“Part of what we’re doing is creating an opportunity to explore more of what the mall has to offer,” Dyke says. “If you join the program, we can provide real-time insights: ‘If you like this, you should really go check this out.’

“We can see where shoppers are going and not going, and understand mall traffic,” Dyke adds. “Let’s say that only 5% of the 50,000 shoppers in the program have been to a particular retailer. We can send an incentive or coupon to drive traffic to that store.”

Reward with unique experiences 

Malls can use the program to set up experiential rewards, too—an increasingly important differentiator between online and offline retail sales. If a shopper reaches VIP status, for example, he or she might get free valet parking or preferred access to an exclusive mall event such as a concert, trunk show, or an appearance from Santa Claus.

The solution could help grow revenues while building a database of customer data, closing the loop on information that has historically been difficult to track.

“The strategy is to be able to attach in-store marketing to inspire sales,” Dyke says. “We can prove that they went in, spent money, at what time of day and how much. There’s a lot of valuable information you can provide to the retailers to add to the full omnichannel experience.”

Retailers can engage high-intent shoppers inside the mall and issue incentives by spend amount, time frame, or location. And since it is specific to a mall, the program can track customer transactions to furnish information on the sales conversions delivered.

“All they do is click, and we have full attribution,” Dyke says.

The strategy may be just the thing to keep malls and the stores inside them viable.

“Just like retailers, malls should reach out to their customers with customized offers, gift ideas and other targeted advertisements based on real-time intelligence and location-based marketing,” says a McKinsey report on the future of the shopping mall.

For shoppers and retailers at Chicago Ridge, it’s a no-brainer. “We made it super-easy for the consumer, and the merchant doesn’t have to anything different,” Dyke says. 

Filed Under: Technology Consumer Trends Marketing
Top image credit: Spring