Broken loyalty schemes cost UK retailers 807 million pounds a year, HyperFinity says

HyperFinity looked at 51 leading British retailers and put a price on their loyalty schemes going wrong. The figure is 806.9 million pounds of gross margin a year, published on 22 September. Split across the group, that is 15.8 million pounds per retailer.

Three faults cost 15.8 million pounds per retailer

The analysis groups the losses under three headings. Shoppers cannot redeem rewards easily, so points sit unused. Rewards lose value over time, so the scheme stops feeling worth joining. Apps run badly, so people give up at the till.

Grocery and sports retail carry the largest untapped value of any sector in the study.

Nine in ten shoppers scan, but only 44% stay loyal

Take-up is not the problem. HyperFinity found 91 percent of shoppers use an app or card on every visit or most visits. Yet only 44 percent say they will stay loyal to a retailer when money is tight. That gap is where the margin goes.

Appetite for tailoring is high. Seventy-nine percent want offers that fit them, and 69 percent are comfortable with AI choosing those offers.

Thomas Hill argues discounts are not a scheme

Hill, who co-founded HyperFinity, says loyalty should mean more than handing out discounts. His argument is that retailers already hold the data to make an offer feel relevant, and mostly do not use it.

British shoppers are not short of cards to carry. Amex found that UK shoppers now hold 12 loyalty schemes on average. Retailers are meanwhile earning from their shopper data in other ways, as Kroger’s media arm turning a profit shows. The wider UK picture came into view this month with IAB UK’s economy report.

Open your own redemption report and count the points that expired unspent last quarter. All three failure modes in the study show up there first, before they reach a margin line. Set that figure against your gross margin and you have the local version of the 15.8 million pound average.