Building Store Loyalty  

Store loyalty exists when a consumer regularly patronizes a particular retailer (store or nonstore) that he or she knows, likes, and trusts. In a market in which a segment of consumers is sensitive to product quality and consumers' brand choice in low-involvement packaged goods categories is characterized by inertia, quality store brands are often used by retailers to generate store differentiation, store loyalty, and store profitability, even when the store brand does not have a margin advantage over the national brand. In addition, this loyalty argument does not apply for the "cheap and nasty" private label strategy. Such a private label policy, on the contrary, reinforces rather than reduces price competition among stores. Indeed, the quality of the store brand must be above a threshold level to create this opportunity. It also follows that quality store brands, when carried by competing retailers, can be an implicit coordination mechanism that enables all the retailers to become more profitable. Finally, a quality store brand policy is profitable only if a significant portion of shoppers buys the national brand. This establishes the complementary roles of store brands and national brands. The former create store differentiation and loyalty, whereas the latter enable the retailer to raise prices and increase store profitability. Customer service represents a key element of retail strategy for maintaining a sustainable competitive advantage and building store loyalty, even during difficult economic times. Customers are becoming more demanding about the services they expect from retailers both online and in person. In light of the importance of customer service, we propose a framework to refine insights into several retail strategy components such as availability of service personnel, responsiveness to customers, personalization, proactiveness, and loyalty programs. These insights may be useful to both practitioners and academics alike. Retail strategies should generally accommodate the specific retail format being used (e.g., physical store, physical and online, or pure online).