Whether you love a loyalty discount at the supermarket or frequently forget your loyalty card, loyalty programs (LPs) can be an essential support to families and households amid growing cost-of-living pressures.
The number of LPs offered by retailers is increasing. Globally, the loyalty management market is projected to grow in value from $17.38 billion USD in 2026, to $51.65 billion USD by 2034. The market will continue to expand as cost-of-living pressures force households to seek discounts, coupons, gifts and vouchers to reduce their shopping expenditure.
New research led by Edith Cowan University (ECU) has analysed survey data from more than 800 Australian supermarket retail customers to better understand what influences customer engagement with LPs, and how effectively the programs impact loyalty to retailers.
The findings will help retailers design LPs based on what is most important to customers.
ECU Professor of Marketing and Service Science, Sanjit Roy from the School of Business and Law, said research found that customer behaviour and retailer loyalty are driven by customers’ characteristics and capacity to engage with LPs.
“Many customers don’t have the time to do mental cost-benefit analysis. What am I getting and what am I giving up? Retailers know this, so they’ll prompt you at the till before you pay, either at self-serve checkout or by a customer serviceperson asking: do you want to scan your rewards card? Do you want to scan your Flybuys card? Retailers know how to reinforce our habit,” Professor Roy explained.
“But as customers we are losing more than we are gaining. If we earn one point for every dollar spent, and every 2,000 points we receive a $10 voucher – is it worth handing over our personal data when discounts and promotions aren’t being personalised or tailored to our buying habits as a reward for our loyalty? Therefore, is it worth signing up for the loyalty programs?”
The results show that LP engagement leads to retailer engagement and customer loyalty – both in attitude and behaviour toward a customer’s retailer of choice.
Dr Saalem Sadeque, Course Coordinator and Lecturer in Marketing at ECU, said a customer’s capability to wait and use LPs played a major part.
“If a customer predicts there will be a future discount on an item they frequently purchase, they may wait a week or two to buy it and buy more of the same product. But if they don’t have the capacity to wait – like a parent desperately needing nappies or with too tight a budget to buy in bulk – they will miss out on the discount despite their loyalty to the retailer,” Dr Sadeque said.
In the age of digital marketing algorithms and discount codes, engaging customers through LPs can create both challenges and opportunities for supermarket retailers.
Implications for retailers
Despite their existence and increased reliance on LPs from major supermarkets like Coles and Woolworths, customers often do not engage with them. The success or failure of LPs depends largely on a combination of customers’ trust in, commitment to and perceived benefits from these programs.
“Our research shows that engaging with loyalty programs from the customers perspective depends on several factors: trust in the retailers, commitment toward and from the retailers, perceived benefits, as well as the ability to wait for discounts (temporal price search strategy), and ability to look for deals across multiple retailers (spatial price search strategy). Our findings demonstrate that no one factor leads to engagement but rather a combination of all these factors,” Professor Roy said.
The absence of these conditions significantly hinders engagement with LPs and retailers.
“A lack of loyalty program engagement also creates uncertainty in cash flow projections which is an additional downside for retailers.”
In a recent report, the Australian Competition and Consumer Commission (ACCC) advised Australian supermarkets to be more transparent about their pricing.
Recipe for success
“Transparency is important to customers. Retailers should strive to be transparent about their prices and business practices, provide exceptional customer service, and send out consistent brand image messages. If you make a commitment to providing fresh fruit and vegetables – ensure you deliver on that promise,” Professor Roy said.
Professor Roy said Australian supermarkets should better use the data generated from individual customers to personalise the benefits offered and build connection.
“Customers know they’re just a datapoint. Supermarket retailers should focus on advancing their LP offering by establishing a personalised dialogue with customers and making their loyalty benefits more human-centric. Creating a personalised dialogue is a precursor to building trust.”
Given that LP engagement is crucial for fostering deeper customer engagement, retailers should design LPs that deliver clear, consistent value and build an emotional connection.
“A tailored, integrated strategy that aligns a loyalty program’s value with trust and relationship building is essential for sustaining customer loyalty and long-term retailer relationships,” Dr Sadeque said.
“Retailers can enhance customer commitment by conducting market research to ensure that their values align with their customers. In addition, retailers may cultivate customer commitment by creating personalised offerings to improve the perceived benefits, increasing the likelihood of customer engagement with LPs.”
The journal article Customers’ Disposition Towards Loyalty Program Engagement is published in the European Journal of Marketing.
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Media contact:
Hayley Butler, (08) 6304 5575, h.butler@ecu.edu.au
or ECU Corporate Relations, (08) 6304 2222, pr@ecu.edu.au
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European Journal of Marketing
Survey
People
Customers’ disposition towards loyalty program engagement
26-Aug-2026
N/A