Yahoo Finance What’s the Secret to a Great Shoe Loyalty Program? Kith, Foot Locker and Under Armour Show Why Exclusives Matter Most
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Kith made waves at the start of 2024 when it launched Kith Loyalty, a new program that rewards loyal consumers with early access to exclusive products, events and more via the Kith App.
The decision to introduce a loyalty program was an interesting one for Kith, which by its nature already caters to a discerning consumer base in the high-heat footwear and streetwear space.
But in 2024, loyalty programs are becoming a big focus for a wider swath of shoe retailers and brands, from brands in the streetwear space to the stores in the family channel.
For example, Under Armour made a major push to launch its UA Rewards program, which surpassed 1 million members in its first few months.
Hibbett last year rolled out a connected membership program with Nike after Dick’s Sporting Goods launched a similar program in 2021. And Foot Locker is in the midst of rolling out its new and improved loyalty program, which it hopes will help give it access to a broader set of consumer data and more repetitive spend.
“Brands want to create a more direct relationship with customers for a variety of reasons and want to get smarter about what their customers are buying,” explained Bobby Stephens, a principal at Deloitte and leader in retail and consumer products.
What’s more, as discretionary spending remains challenged, loyalty programs offer retailers and brands a better chance at winning more wallet share during an otherwise challenging environment for shoe spending.
Winning market share
Foot Locker’s aims to reach 50 percent penetration in its loyalty program by 2026, with a long term goal of 70 percent. The program’s North American rollout comes after a successful test in Canada that yielded bigger basket sizes, more frequent shoppers, more engagement, increased sign-ups and more first-time customer engagement.
“If I learned one thing about studying multiple loyalty programs, whether it’s restaurants or retail, you don’t want it to be too complicated,” Foot Locker chief executive officer Mary Dillon said at J.P. Morgan’s annual Retail Round Up conference in early April. “You want it to be something that encourages more share of wallet to you. And that’s what we’re learning is happening with the test we did in Canada.”
Winning more market share is also the goal for Caleres, which owns Famous Footwear, Sam Edelman and other brands, as it rolls out more loyalty programs for its brands. In a March earnings call with analysts, Caleres president and CEO Jay Schmidt said that the company’s recently launched Naturalizer Insider loyalty program is already yielding “positive spending trends with loyalty members.”
“We are also seeing an increase in younger consumers, driven by strong relevant fashion offerings and targeted marketing efforts, including new collaborations and partnerships,” the executive added.
Exclusive products
When it comes to footwear-specific loyalty programs, consumers are gravitating towards the ones that offer exclusive products. According to a recent Deloitte survey of 3,200 U.S. consumers, it is between 5 and 10 percent more important to consumers for apparel and footwear loyalty programs to offer exclusive products compared to the overall retail average.
“We certainly see more importance on exclusivity when you look at the apparel and footwear sub-sectors specifically, “ Stephens said.
That exclusive element is one of the key pillars behind Under Armour’s UA rewards program. According to Jim Dausch, Under Armour’s executive vice president and chief consumer officer, the company leverages its “roster of UA athletes and teams to provide consumers with access to signed gear, early access product drops, and celebrity athlete experiences.” For example, members of the program might be able to snag a VIP visit with Stephen Curry or get access to limited-edition products like the UA Slipspeed Logic and UA Slipspeed Jet player exclusive with Justin Jefferson.
“We are also constantly adding new exclusive opportunities for members with Under Armour athletes and teams,” Dausch told FN.
Under Armour added three million U.S. rewards members just more than six months after launching the program, which was ahead of its 2024 targets. And it has observed that members of the program display a higher purchase frequency and overall higher spend than non-members.
“Members are engaging with the brand in several ways such as purchasing products, writing reviews, and participating in challenges and sweepstakes,” Dausch said.
Standing out
Other than exclusive access to products, shoe loyalty programs need to find other ways to differentiate from their competitors. As an example, some companies like Foot Locker or Amazon have opted to offer free shipping to members, something that is perceived as a large benefit to its members but does not cost the company that much.
“Make it compelling for people to shop at you versus elsewhere,” Wayne Taylor, an assistant professor of marketing at the Cox School of Business who studied loyalty programs. “If I’m buying my shoes at another retailer, what am I losing by not shopping at this focal store?”
Having a strong digital experience is another important characteristic for shoe loyalty programs, especially for brands that cater to younger, more digitally native demographics. According to the Deloitte survey, there is a 10 percent gap between the importance of the digital experience for apparel and footwear brands compared to the overall retail industry.
“Athletic and fashion footwear may have a slightly different demographic shopping for those that put a higher importance on the digital experience,” Stephens said, adding that the nature of footwear lends itself to more visual curiosity on the part of the consumer, which can be aided by digital elements. “How does it look, sizing, styling and other other aspects … it’s really important for that digital experience, especially the native app, to be on point and really speak to that customer.”
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