The Special Relationship: How the circular economy can drive loyalty

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We have some great reads this week from re-vamping loyalty schemes at some of our biggest supermarket chains, all the way through to a new start up re-engineering the employment journey in-store.

We start this week on the topic of loyalty schemes, an area much loved by one of our co- This Week In Retail editors, Mr Petrov! Tesco have announced a new ‘Clubcard Plus’ subscription that will cost £7.99 per month when it launches later this year. The subscription will allow members to get a range of new benefits from discounts on own label products through to reduced phone bills and lower bank fees. At the same time, retailing giant Sainsbury’s have also tweaked their loyalty scheme to boost personalised points offers for Nectar card members. In light of some hostile challenges to the typical grocery model from both Aldi and Lidl, I found it interesting to see that both Tesco and Sainsbury’s aren’t necessarily taking part in a race to the bottom. Instead, they have targeted loyal customers providing repeat purchases with their savings – perhaps a more measured approach!

Sustainability has been a hot topic this past week Sticking with this theme, I found two stories revolving around the circular economy within fashion really interesting. Starting with Burberry who have announced a partnership with RealReal this past week. The company provides an online Marketplace for authenticated luxury goods up for re-sale. The sustainability equation within the luxury fashion industry has always been a tough one; how do you offer genuinely sustainable options for customers to re-sell their clothes without reducing the Brand Equity? This partnership certainly goes a long way to answering this question without de-legitmising the brand and creating a hotbed for counterfeit products – so much so that Burberry are incentivizing the initiative by giving those customers who re-sell their clothes, the opportunity to take part in a personalised shopping experience in-store. In similar vein, Farfetch have teamed up with Thrift+ to give their customers the opportunity to send their unwanted clothes for re-sale. Once an item is sold on Thrift+, a third of the proceeds are donated to a charity of the customer’s choice, a third is given to the customer as Farfetch credit, and a third is used to cover Thrift+’s cost. Both initiatives here offer sustainable options to customers whilst also boosting the top line feeling like a win-win to the retailer.

Finally, one of my favourite articles this week provided insight into a new start-up called Jyve. The company challenges the typical gig economy model for resourcing across the retail industry, instead focusing on what they call the “skills economy”. A stand out quote from the co-founder stated that: “I believe the skill economy is way bigger than the gig economy”. Therein lies the business model; by finding the right people, for the right job and rewarding strong performance, on the job success is likely to be greater for both the employee, and the retailer. Using machine learning and AI has allowed the company to match their pool of talent to jobs they know their employees are likely to be good at, building in a continuous feedback loop. It may not seem too revolutionary, but reducing employee churn and enhancing performance can only be a good thing?



Nick Hoenig

Managing Consultant, Operations Transformation

Retail, with a focus on Store Transformation and Store Evolution, Proposition Development, and Landing Change in Retail


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