Loyalty and rewards program industry outlook in Europe in 2023

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Amid the current macroeconomic environment, loyalty programs have become the go-to tools among consumers, as they seek to receive better value for their spending. Rising inflation and surging cost of living has accelerated the adoption of loyalty and rewards programs, especially among consumers in the European market, as inflation has touched multi-year highs.

To provide their members with more value, an increasing number of businesses are seeking to revamp their loyalty programs with more benefits and experiences to tap into the untapped demand. Furthermore, European retailers have largely invested to provide a personalized loyalty program for their customers. Many are also engaging with their customers outside the buying cycle, by rewarding members even beyond business transactions.     

European retailers are forging alliances to launch an integrated loyalty program for customers

To further make their loyalty programs more valuable for members, retailers are forging strategic partnerships to launch an innovative integrated loyalty program in the region. For instance,

• In September 2022, JD Sports, the European retailer, announced that the firm had entered into a collaboration with Nike, the sportswear giant, to launch an integrated loyalty program. Under the partnership, the two firms are offering a combined loyalty program for members to access added benefits, such as reward bonuses and limited collections, when they link the two memberships using the mobile apps. It is one of its kind integrated loyalty programs and is the first to be launched in Europe.

More retailers are projected to forge such strategic alliances and combine their loyalty programs to offer richer, better, and more engaging experiences to their customers across the region.

Payments firms are launching loyalty and rewards programs for their users in Europe

Amid the growing competition in the digital payments space, firms are seeking to leverage the capabilities of loyalty and rewards programs to make their service more attractive among consumers in Europe.

• In September, SumUp, a mobile point-of-sale firm, announced that the firm is venturing into the B2C segment with the launch of a digital wallet and loyalty rewards program. The firm is offering European consumers a payment method including a virtual Mastercard with an integrated loyalty scheme. The integrated loyalty and payment solution is aimed at simplifying and enhancing the payment experience in the market, which has recorded strong growth in the digital payment segment.
• In September 2022, Curve, one of the leading fintech in the region, also announced the launch of a new rewards program. The fintech is offering cashback in the form of crypto to users across Europe and other markets globally. The firm is offering rewards across a wide range of eligible digital assets. In the global market, the firm had amassed more than 3 million users and also launched its service in the United States in March 2022.

From the short to medium-term perspective, PayNXT360 expects more payments-focused firms to launch loyalty and rewards programs, as they seek to boost the popularity and adoption of their services among consumers in the region. This will further drive the competitive landscape in the European loyalty and rewards programs industry.

Inflation is driving an uptick in loyalty program adoption among consumers across the European markets

With the rising cost of living and inflation affecting the monthly household budgets for many in the region, there has been an uptick in the adoption of loyalty programs. Furthermore, supermarkets are also revamping their programs to provide more value to their members. For instance,

• In December 2022, Tesco, one of the leading retailers in the region, announced that the firm will be offering personalized coupons every two weeks to its Clubcard members, as part of its strategy to reduce the burden of inflation faced by consumers. The loyalty program, which is free to join for consumers, is one of the most sought loyalty and rewards programs in Europe.

Almost all of the supermarket chains in the region have their own loyalty programs and these schemes have gained widespread momentum amid the current macroeconomic environment. As consumers continue to adopt loyalty schemes in increasing numbers and depend on them to better manage their finances, PayNXT360 expects more retailers to further revamp their loyalty programs to better accommodate the needs of their customers in Europe.

To know more and gain a deeper understanding of the European loyalty programs market, click here.