Customer Loyalty Schemes in the Retail Sector

Jose B. Alvarez; Aldo  Sesia

Background Note | HBS Case Collection | March 2011

Customer Loyalty Schemes in the Retail Sector

Abstract

Customer loyalty schemes (or programs) are explicit efforts by retailers to gain long-term patronage from customers. Loyalty schemes are developed for a variety of reasons: to reward loyal customers, to generate more robust information about customer behavior, to influence consumer behavior, and as a defensive measure to combat a competing scheme. The purpose of this note is to describe the objectives of these schemes, including their origin and evolution; to highlight key aspects of their implementation; and to suggest approaches to maximize their impact. While this note focuses on the U.S. and U.K. retail sectors, most of its content is applicable to other economies.

Keywords: Customer Relationship Management; Consumer Behavior; Business Strategy; Retail Industry; United Kingdom; United States;

Format: Print

10 pages

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Citation:

Alvarez, Jose B., and Aldo Sesia. "Customer Loyalty Schemes in the Retail Sector." Harvard Business School Background Note 511-077, March 2011.

This case, a follow on to HBS No. 517-049 "Luvo," provides a brief look at changes that have occurred at Luvo, now called Performance Kitchen, since the timing of the first case (mid-2016). Set in January 2020, “Luvo (B)” touches on developments such as the company's purchase of a small food retail chain and its "food-is-medicine" strategic positioning, which includes selling to health insurers and other firms in the health care industry.

Background Note | HBS Case Collection | April 2020

U.S. Food Retail During the Pandemic: March 2020

José B. Alvarez and Natalie Kindred

This note, written in late March 2020 and mainly U.S. focused, looks at the unfolding impact of the coronavirus pandemic on food retailers and their suppliers. It allows student to consider the challenges facing food retail executives as they navigate urgent supply chain challenges amid rapidly changing information and circumstances. It touches on developments in various segments of the supply chain, including farms, manufacturers, the trucking industry, warehouse operators, and store operations, as well as home delivery. The note is "set" as the outbreak is accelerating in the U.S., where the first "hot spots" include cities such as Seattle and New York City. Officials in many states have ordered or advised residents to stay home, exempting those employed in industries designated "essential," including food. The food industry is contending with a massive surge in demand for staple goods, as consumers worry about product shortages, seek to minimize store visits, and anticipate long stretches of time at home. Stock-outs and rationing in some categories in stores are widespread. Demand for online food shopping and delivery has skyrocketed well beyond the current capacity of retailers in many markets. As they scramble to respond, players up and down the food supply chain are changing how they source, make, move, and stock products. While U.S. officials have asserted that the food system remains reliable, anecdotal news is emerging of problems facing individual players, industry segments, and geographies. With the crisis expected to continue for weeks or months, all are bracing for even greater challenges.

Keywords: coronavirus pandemic; Risk and Uncertainty; Risk Management; Food; Supply Chain; Consumer Behavior; Demand and Consumers; Trade; Crisis Management; Health Pandemics; Food and Beverage Industry; Agriculture and Agribusiness Industry; Retail Industry; United States;

Citation:

Alvarez, José B., and Natalie Kindred. "U.S. Food Retail During the Pandemic: March 2020." Harvard Business School Background Note 520-098, April 2020. View Details

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Impossible Foods founder and CEO Pat Brown started the company out of concern over livestock production’s impact on climate change. Impossible’s mission is to end consumption of animals by 2035, and its strategy is to develop and market plant-based foods so similar to meat that carnivorous consumers will happily switch. This case is set in August 2019, with the Silicon Valley–based firm in a stage of hyper-growth. Its flagship plant-based ground “beef” product, launched three years ago in the foodservice channel, is on the menus of 17,000 restaurants including major U.S. fast-food chains, and a grocery launch is just weeks away. With more demand than it can meet, Impossible is rapidly expanding its workforce, investing heavily in R&D, ramping up production capacity, and pushing to accelerate international expansion. It has raised $750 million from investors to date, but much more capital will be needed. There is speculation about a potential IPO. This case invites students to consider the factors that fueled Impossible’s success to date, its current strategy, and the steps necessary to enable the growth that Brown and his team, many hired from tech giants like Apple, envision. It also invites reflection on the environmental impact of food production and the political and social dynamics that can spur and prevent change in the food system.

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Customer Loyalty Schemes in the Retail Sector

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