In an era of economic uncertainty and rapid technological advancement, retailers are fundamentally reimagining their approach to customer loyalty. Eagle Eye’s recent report, Loyalty’s Next Chapter: The Forces Reshaping Retail in 2025, suggests that retailers’ focus will center on two main priorities: maximizing the value of customer data and helping budget-conscious consumers navigate challenging financial times, utilizing artificial intelligence and advanced personalization techniques to do so.  

From Pilot Programs to Scalable Solutions

While AI and personalization have dominated retail industry discussions for the past several years, 2025 marks a decisive shift from theoretical potential to practical implementation. Retailers are moving beyond small-scale pilots and incremental successes. Instead, they’re prioritizing tangible outcomes from their technology investments, with a laser focus on measurable metrics like operational efficiency improvements and revenue growth. This pragmatic approach reflects a maturing industry that’s ready to scale successful applications across their operations.

Those results may be substantial. Boston Consulting Group’s recent analysis claims that personalization leaders are projected to capture $570 billion in global growth by 2030. According to McKinsey, AI is poised to unlock between $240 billion and $390 billion in economic value for retailers.   

Closing Retail’s ‘Digital Black Hole’

Despite the promise of technologies like AI and the inherent value of customer data, limitations remain, particularly in the grocery sector, where the digital revolution intersects with established shopping behaviors. Digitally engaged customers are often a retailer’s most valuable segment, and they benefit from all of the retailer’s investments in digital infrastructure, though they still typically represent a minority of the total customer base.

For example, a grocery chain with 20 million customers but only 1 million of which are connected to the grocer’s digital channels can deploy the most advanced and data-rich personalized offers and rewards, but they will still bypass 19 million shoppers. This disconnect has created, in effect, a “digital black hole” – a gap between sophisticated digital capabilities and the shoppers that experience them.

Forward-thinking retailers are tackling this challenge head-on by transforming their physical locations into digital recruitment hubs: incentivizing staff to encourage app downloads and loyalty program sign-ups and strategically placing in-store promotions and retail media networks to boost digital engagement. The potential is significant – industry analysts predict the retail media market will triple by 2027, reaching over $100 billion in the US alone.

This hybrid approach acknowledges the continued importance of brick-and-mortar stores while creating natural pathways to digital adoption. The integration of physical and digital experiences is proving effective, as loyalty programs can be used to enhance in-store experiences through features like mobile checkout, personalized in-store promotions, and exclusive access to new products or services. These features help bridge the gap between digital capabilities and traditional shopping preferences while providing meaningful value to customers.

The Price-Sensitive Consumer: A Persistent Loyalty Challenge

Consumers are hungry for that value. The current economic climate has significantly impacted consumer behavior, with shoppers increasingly prioritizing deals and discounts over brand loyalty. According to recent research, 69% of shoppers are seeking value and relief through more relevant promotions, personalized deals, and loyalty efforts.

This trend has created a more transient form of loyalty, where customers readily switch between retailers based on promotional offerings. Traditional loyalty programs that rely solely on points accumulation are struggling to maintain customer engagement in this price-sensitive environment.

The Return of Coalition Programs

As an alternative to traditional programs and offering broad-based everyday value, coalition loyalty programs are experiencing a renaissance, particularly in the Asia-Pacific region. These multi-brand programs are being reimagined through the lens of modern technology and AI capabilities. Unlike their predecessors, today’s coalition programs offer unprecedented flexibility and responsiveness to member needs, and a way for members to personalize the value they accumulate.

Advanced AI algorithms can analyze cross-brand shopping patterns to deliver more relevant rewards and personalized experiences, while modern technology platforms enable seamless integration between participating brands. At a time when approximately 90% of companies – including most well-recognized retail brands – have loyalty programs, adopting a coalition strategy may offer a path to differentiation.

Beyond Points: Creating Meaningful Value Propositions

However, the key to success in this evolving landscape lies not in the sophistication of the technology or the size of the discounts (or the breadth of the coalition) but in the fundamental value proposition offered to customers. Eagle Eye’s 2023 report, “Grocery’s Great Loyalty Opportunity,” revealed that 69% of shoppers prioritize “value” in loyalty programs, and 84% believe personalized recommendations can help them save money. Retailers must move beyond simple point accumulation to create programs that genuinely enhance the shopping experience and provide meaningful benefits to members.

For some consumers, accruing points toward an aspirational reward or status will be a priority; others will find more frequent redemptions for discounts or smaller points-based rewards will resonate. The value is in the choice and flexibility.

Leading retailers are focusing on convenience, exclusive experiences, and personalized interactions to create that meaning and deliver those benefits. The best performers are utilizing data analytics to provide personalized product recommendations and tailored promotions that feel less like marketing and more like a valuable shopping assistant.

Strategic Considerations for Sustained Success

This year, the success of retail loyalty programs will hinge on their ability to adapt to changing consumer needs while delivering clear, measurable value. As rising living costs drive shoppers to seek out the best deals, programs that can demonstrate real savings, provide genuine convenience, or offer personalized offers and experiences will likely outperform those that rely solely on traditional points-based rewards.

Yet, the challenge remains—balancing digital efficiency with the human element that still defines most shopping experiences. Retailers that successfully execute data-based engagement strategies while keeping customer value at the core will be best positioned to strengthen customer relationships as loyalty shifts from routine transactions to more dynamic, value-driven experiences.

About the Author

Sarah Jarvis, Communications and Propositions Director, Eagle Eye
With over 15 years of experience as a retail marketing leader in the loyalty industry, Sarah has worked with some of the world’s largest retailers and FMCG brands to help them drive profitable growth by prioritizing the customer in their decision-making processes. Her expertise spans loyalty program design, CRM, personalisation, data analytics and commercialisation, and the technical implementation of initiatives that bring retailers and brands closer to their customers.

In addition to co-authoring the 2nd edition of Omnichannel Retail: How to Build Winning Stores in a Digital World, Sarah is a Forbes Communications Council member and the Communications and Propositions Director for Eagle Eye, the SaaS technology company enabling retail, travel, and hospitality brands to earn the loyalty of their end customers by powering their real-time, omnichannel and personalised consumer marketing activities.