Upside, a digital marketplace for brick-and-mortar retail, has released Escaping the Loyalty Plateau, a report on the state of retail loyalty based on survey data from more than 12,000 U.S. consumers and retailers.
Consumers are joining programs at record rates, with 82 percent of grocery shoppers belonging to at least one, according to the report. But only 59 percent use their program on a regular basis, and the average member now belongs to 3.4 programs in the same category, a 47 percent increase since 2023 and the steepest acceleration of any category studied.
The report found a 27-point gap between the share of consumers who say loyalty matters and those who use their grocery program on a regular basis. Upside’s loyalty influence score for grocery came in at 39.2 out of 100, the lowest of the three retail categories measured – grocery, fuel and convenience stores and restaurants. Despite having the most members, grocery programs have the least behavioral influence per member, the report found.
According to the report, 60 percent of grocery consumers are “preference-first” shoppers with high brand affinity and high price sensitivity, making them the most responsive to loyalty incentives, yet most programs are built to reward already-committed customers rather than this persuadable majority. Only about one in 10 grocery loyalty members is committed enough that incentives won’t change their behavior, meaning 90 percent of the membership base has some degree of persuadability that most programs aren’t designed to reach.
The report notes grocery loyalty programs do influence which items consumers buy and when they visit, but growing overall spend is a harder behavioral lever, one that has become harder to pull as the landscape has grown more crowded.
The report attributes that crowding to structural factors. As major grocery chains have introduced app-based programs with similar features – digital coupons, personalized offers and fuel discounts – the barrier to joining has dropped to a phone number at checkout. Consumers sign up and accumulate memberships because opting out of any one of them feels like leaving money on the table, the report said. The result is a landscape where more investment is producing less differentiation.
“A grocery loyalty membership has become a bit like a gym membership in January – easy to sign up for, genuinely well-intentioned, and easy to let sit. That’s not a reflection of the program. It’s a reflection of how crowded the landscape has become,” said Dr. Thomas Weinandy, principal research economist, Upside.
Upside’s analysis of transaction data found that consumers who supplemented their loyalty program with a broader marketplace platform saw month-one churn fall by more than 30 percentage points compared with those using neither. The report urges grocery operators to treat preference-first consumers as a persuadable audience that responds to personalized, performance-based incentives rather than blanket promotions.
The full report includes a breakdown of consumer segments, category-level influence scores and retention data across millions of transactions.
Upside is a digital marketplace that connects millions of consumers with brick-and-mortar retailers nationwide. The company has operated since 2016 and runs billions of dollars in commerce through its platform annually.