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Retailers face increasing challenges to maintain customer loyalty as middle-class shoppers become more informed, more aware and more fickle than ever.
Petty Nugrahadi, an assistant manager at a cable TV provider, keeps 12 membership cards in a special case in her handbag. She acquired her first card, that of Metro Department Store, in 2005.
As time went by, Petty started shopping — and applying for membership — at different stores, most of which offer similar products. “I want to get the best prices from all of them,” she said.
Now the mother of one is also a member of Star Department Store, Pasaraya, Centro, Ace Hardware, The Body Shop, Accorhotels, Birds and Bees, Century Healthcare Pharmacy, Hypermart, Lotte Mart and the Ismaya Group of restaurants.
Petty is only one of the swelling middle-class with numerous cards from many customer loyalty programs.
Dini Valdiani, a lecturer, has five loyalty cards in her purse — from those of rival department stores to a pharmacy.
As theses cases show, there is not much customer loyalty in loyalty programs.
Marketing analyst Yuswohady from Inventure Consulting said, at first, customer loyalty programs were offered in a somewhat prestigious way to retain customers because it was every retailer’s nightmare to see their clients switch brands. Over time, however, economic benefit trumped prestige for educated consumers, he said.
“Signing up for membership does not prevent consumers from shopping elsewhere. They are much more knowledgeable, highly connected and have more buying power than before,” he added.
The Indonesian Retailers Association (Aprindo) deputy secretary-general Satria Hamid said retailers were fully aware of the customers’ multiple membership cards. “Customers have every right to apply for other loyalty programs. But we are presented with new challenges now. Customers can discover, compare, evaluate and choose other brands solely on their merits,” he said.
However, he insisted it was still important to maintain loyalty programs as members usually contributed up to 30 percent of the retailers’ total sales.
The pull of middle-class purchasing power is what keeps retailers competing. Last year Bank Indonesia reported that the population with a “middle-class income” exceeded 140 million.
Fashion and lifestyle retailer PT Mitra Adi Perkasa (MAP), which holds licenses of more than 100 brands, is coming up with a new strategy to beat the competition: a new membership card valid for purchases of all brands, according to MAP corporate secretary Fetty Kwartati.
“At the moment, we only have separate membership programs for Debenhams, Sogo, Kidz Station and Sports Station,” she said, adding that the membership amounted to hundreds of thousands.
Meanwhile, PT Monica Hijau Lestari, which operates The Body Shop outlets, revamped its “bring back our bottles” policy last June to create a more “green” and intimate relationship with its 600,000 members.
By returning three used packages, members get five points to collect and exchange for free gifts. Prior to the change, they were required to return 25 packages.
Under the new policy, The Body Shop had seen an increase in member activity, customer loyalty manager Astrid Lewarissa said.
“The membership program is essential for us. Revenues from it makes up for 70 percent of our total revenue,” Astrid said, declining to reveal the figures.
PT Ace Hardware Indonesia is trying to keep up with the others as well. The home furnishing company showers its 580,000 members, whose purchases contribute to 55 percent of total revenues, with monthly discounts and two big annual sales.
Ace prides itself on its variety of products and after-sales services. “That’s where we try to focus to maintain our membership,” Ace corporate secretary Helen Tanzil said.
All in all, Yuswohady said, it would take at least three years for retailers to find out the effectiveness of their customer loyalty programs. (tas)