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Why Loyalty? – Banana Republic

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Why Loyalty? – Banana Republic
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Inspiration for the third installment of Why Loyalty came from Banana Republic. Only a short walk down the mall from the Skechers store discussed in the previous post, we were attracted by signs on the window of the store touting “up to 70% off selected items”.

The chance at making good on Groupon-like discounts in a big mall were too attractive to pass up and our excursion to Banana Republic was on.  The success of our trip to the store was blunted by encountering a true Loyalty Asterisk. It seemed as though every compelling item attractive to our eyes was priced at full retail. Frustrated, we queried a store associate and discovered that the sale items were limited to a compressed area towards the rear of the store.

In the age of Amazon, Walmart, and Groupon, mall retailers can’t be blamed for resorting to what has to be described as “bait and switch” tactics. Don’t get me wrong, there was nothing deceitful at work in Banana Republic. Many items were on sale, and some were marked down with very deep discounts in line with the advertised figure in the window. The trouble was the limited selection of available sale items, and the fact that even that rack had a minority percentage marked down to 70% off. So, while there was no deceit, there was disappointment.

Seeking some relief for our disappointment, we asked the associate (who was providing attentive service) if there were any other discounts available. The reply was framed by an offer to apply for the Banana Republic credit card.  By doing so, we could have earned 20% off that day’s purchase, though no continuing benefits were well described.

Loyalty Truth:

  • With competition in the payments business at an all time high, convincing consumers that a credit card with limited acceptance and utility is worth putting in the wallet is a tall order. Limiting loyalty benefits to consumers based on their choice of payment method is a loyalty no-no that even Colloquy, the Oracle of private label card issuer Alliance Data Systems, preaches against.
  • Retailers need to consider alternate models, coalition being one of them. Absent a national loyalty coalition in the US, joining up with Shopkick might be an option to consider.
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