By Allie Naughton, Client Strategy Manager, Listrak
With access to more choices, platforms and content, today’s consumer is smarter than ever before. At the same time, inflation has placed pressure on their spending habits, making them more discerning about when and where to spend.
The combination of consumer savvy and price consciousness means that it is increasingly competitive for retailers and brands to win – and retain – customers.
Here are three key ways that retailers and brands can connect with consumers in 2025:
Be transparent with prices & strategic with discounting: For many consumers today, price matters above all, and astute consumers are less likely to be brand loyal unless they understand that the brand’s superior quality is worth the price. If a brand doesn’t adequately explain why their product is worth premium prices, consumers may be just as happy to pay less for a “dupe,” as evidenced by last year’s headline-making athleisure and handbag dupes.
Brands need to clearly communicate why their products are worth it, whether it is because of their sustainable ingredients or the quality of their materials and craftsmanship. This transparent communication will be rewarded by shoppers. For example, according to PwC’s 2024 Voice of the Consumer Survey, consumers are willing to spend an average of 9.7% more on sustainably produced or sourced goods, even amid cost-of-living and inflationary concerns.
All retailers, no matter the quality and sustainability of their product, also need to be strategic in their discount strategies this year. Some consumers are willing to wait until large discount times of year (i.e. Black Friday/Cyber Monday) to feel like they are stretching their dollar farther, and brands need to be there to meet that demand. Most brands heavily discount on average five times a year with their biggest discounts timed around the holidays. As we look into 2025, it will be critical for brands to balance value-driven discounting as well as transparent positioning to succeed.
Make consumer loyalty worth their while: In 2025, consumer loyalty is not something to be taken for granted. Even among older consumers, long courted by brands for their supposed fidelity, loyalty is waning, with McKinsey reporting, “Speaking of older shoppers, it turns out that the brand loyalty they’ve long been known for is a thing of the past.”
Astute consumers want to receive something in exchange for their loyal business, and brands must reconsider what they can do to incentivize their very best customers. According to eMarketer, “US consumers held an average of 19 loyalty program memberships per person in 2024—the highest rate in 10 years.” Last year, major brands like Sephora and Target debuted leveled-up loyalty programs.
When rethinking their existing loyalty programs, retailers should prioritize personalization. eMarketer reports, “The top aspect of a personalized shopping experience consumers value is a loyalty program that’s tailored to their shopping preferences.”
Retailers should also be looking to improve the ease of using loyalty points, such as enabling shoppers to pay with loyalty points at the point of sale (POS), to improve engagement and enhance the shopping experience.
Plus, look for ways to offer more experiential rewards such as trips and sporting events for the very best customers. For example, Starbucks recently linked its reward program with Marriott Bonvoy, about which the companies said, “By enrolling in both programs and linking accounts, members can earn Marriott Bonvoy points and Starbucks Stars and be on their way toward free stays and coffee as well as access to curated travel experiences.”
Unify in-store and digital experiences: As they do their homework before they buy, smart consumers are combining online shopping and research with the tactile experience of handling products in store. Over the past year, digitally-native brands like Skims and Wayfair opened physical stores, highlighting the importance of both brick and mortar and digital experiences.
The challenge for brands: consumers expect one unified and personalized experience that accounts for all their shopping habits. According to Salesforce research, “84% of shoppers expect a seamless shopping experience across a retailer’s app, website, and in store, but 29% feel retailers don’t deliver on that expectation.”
In order to keep pace with consumer behavior, brands and retailers need to work to unify their data from all platforms, as well as in person shopping, to better understand and communicate with their consumers.
The bottom line: Astute consumers require leveled-up strategies
Consumers today have become better informed, more sophisticated and more discerning. In order to compete for, win and keep their business, retailers, in turn, will need to be more transparent with prices, more rewarding of loyalty, and better able to provide a seamlessly unified shopping experience across platform and brick-and-mortar stores.
The challenges facing brands and retailers also represent great opportunities to level-up their game with strategies that will make 2025 their best year yet.
About the Author
Allie Naughton is Client Strategy Manager at Listrak, which recently issued its 2025 Retail Outlook.
