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February 9, 2022

Customer Loyalty in Apparel: Technology trends

Customer loyalty is becoming harder to achieve as consumers now have an abundance of options to choose from when shopping in the highly competitive apparel market. To address the ever-growing challenge of retaining shoppers, retailers are looking for new technological solutions that aid them in leveraging their most important asset – customer data.

Listed below are the key technology trends impacting customer loyalty in apparel, as identified by GlobalData.

Artificial intelligence (AI)-based technologies

Retailers are striving to improve the online shopping experience by launching various technology-driven initiatives on their websites, aimed at enabling customers to make sound purchase decisions and reduce the chances of order returns. Technologies like AI and machine learning (ML), and their positive implication over other technologies like geolocation, augmented reality, and virtual reality, are heavily enhancing the experience of loyalty programmes. For example, Amazon Prime has a huge impact on customer loyalty with its tech-enabled Prime Day event and deals specifically for its members along with personalised notifications and product recommendations.

Nordstrom offers Nordstrom Rewards, which uses geolocation technology to improve the shopping experience by letting users create their own wish list, and providing notifications when they are near any of the stores via the app’s beacon technology. British online fashion retailer ASOS has partnered with Israeli augmented reality (AR) and AI company Zeekit to launch ‘See My Fit’, enabling shoppers to witness simulated views of models wearing clothes and accessories.

Blockchain

Blockchain technology is a method of storing transaction-related information such as date, time, amount, and the transacting parties, in separate blocks or digital storage units. Each of these blocks are uniquely identified with a hash code and added to a public database. This is a decentralised method of storage of transactions in a peer-to-peer (P2P) network, with increased anonymity, which retailers can leverage for devising loyalty programmes.

Apparel brands incorporate blockchain-based technology to ensure authenticity and traceability of products in their supply chain. For example, LVMH launched Aura, a blockchain-based platform in collaboration with Consensys and Microsoft, with the goal of tracking product authenticity and sharing this with consumers.

Loyalty programmes often come with security concerns as retailers collect customer information; blockchain technology provides a solution for these issues, as it only stores data related to the transaction and no privileged information of the card holder. Also, blockchain tokens give customers the flexibility of usage across any transaction unlike traditional reward systems.

Mobile

The mobile channel has become an increasingly important tool for retailers to take advantage of when running loyalty campaigns as many consumers, especially the younger population, shop on mobile applications. Mobile-based loyalty programmes can help retailers to reach consumers directly and collect extensive data to understand their buying patterns. Retailers can use this information to optimise their marketing efforts in a more personalised way.

Mobile applications are becoming more seamless with continuous updates, which is enhancing customer engagement and loyalty as shoppers have access to features, such as searching items, adding them to cart and paying through apps. In addition, features like push notifications and personalised messaging build engagement among shoppers by keeping them updated about new campaigns or offers and giving them a way to provide feedback on their purchases.

Mobile wallets

There has been significant growth in the usage of mobile wallets as a payment method, especially among the younger tech savvy population. Consumers are now seeking mobile wallets not just for payments, but also for rewards each time they make a payment. Thus, retailers are running suitable loyalty programmes over these wallets.

Integrating loyalty points into mobile wallets helps users to keep a track of all their loyalty programmes, exchange points across programmes and redeem easily with every transaction. With the help of smartphones, these wallets send notifications like location-aware information, reminders about expiration of rewards, as well as loyalty programme updates.

David’s Bridal, a US-based clothing retailer that specialises in wedding dresses, prom gowns, and other formalwear has partnered with Popwallet, a mobile wallet marketing platform, to better promote its brand among shoppers. The partnership enables the retailer to engage directly with shoppers via mobile wallets like Apple Wallet and Google Pay, while Popwallet offers dynamic coupons, offers, and rebates to shoppers.

This is an edited extract from the Customer Loyalty in Apparel – Thematic Research report produced by GlobalData Thematic Research.