Will loyalty cards rescue the UK retail market?
Over the last few days we have seen a significant number of retail companies revamping and relaunching their loyalty cards. Tesco has spent in the region of £150 million on a relaunch of their Clubcard operation although this just appears to be the tip of the iceberg. There is a feeling among retailers in the UK that loyalty cards will not only attract more customers that they will in due course attract greater retail spend.
The potential short-term pain of increasing discounts to customers, with loyalty cards, may be a small price to pay in the longer term as the UK retail sector continues to struggle. Cash flow has been, and continues to be, a major issue amongst many of the larger, medium and smaller sized operations with many just happy to get by at this moment in time. There has been no significant increase in retail spending for many months now amid concerns we could be on the verge of a second wave of significant bankruptcies and insolvencies in the sector.
There is also a feeling among some in the sector that many UK banks are waiting for a recovery in the UK economy before calling in substantial debts owed by a number of the U.K.'s leading retailers.
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