Retail Strategies for Loyalty in a Price-Driven Market

Rapidly growing inflation and sharp competition in the market are forcing retailers to embrace new approaches to attract and retain customers. Loyalty programs, omnichannel strategies, and data-driven personalization are some of the emerging strategies that businesses large and small are deploying to remain competitive, say experts. 

 “All of Latin America has faced inflationary challenges; Mexico was no exception, closing 2024 at 4.21%,” says Carolina Arévalo, Country Manager Mexico, Twilio. Between 2021 and 2024, Mexico’s inflation averaged 6.4% annually, according to INEGI, prompting consumers to become more price-conscious and strategic in their purchasing decisions. For retailers and e-commerce platforms, this has driven a shift from price wars to value-driven strategies aimed at preserving customer trust.

Furthermore, the rapid digital adoption spurred by the pandemic has shown no signs of slowing. E-commerce in Mexico grew by 24.6% in 2023, reaching a market value of MX$$658 billion, according to the Mexican Association of Online Sales (AMVO). 

An effective strategy to fight market pressures is to focus on elements the company can control, including its workforce, costs associated with suppliers, and overall productivity and efficiency, says Christian Vega, Commercial Vice President, H-E-B México. H-E-B México is implementing efficiencies across various aspects of its operations, from technologies like AI for process simplification to comprehensive training and optimized logistics, says Vega. "When there is inflation, the one who passes on the least costs to the customer is the one who ends up in the best position,” he adds.

A recent KPMG report reveals that 63% of Mexican consumers switched brands in the past year, motivated by better prices, more relevant offers, and greater convenience. Rising customer acquisition costs (CAC), which have increased by over 25% in the past three years, have made loyalty programs and data-driven personalization essential. Tools like AI-driven product recommendations, proactive customer service, and subscription-based benefits are helping reduce churn and extend customer lifetime value (CLV).  

“The loyalty program is not just a points or money accumulation program, but rather the vehicle for understanding our customers; it allows us to have customers’ voices about what they are experiencing, improving our understanding of their feelings and decisions,” says Rafael Orozco, Marketing and CRM Director, Chedrahui Mexico.

Mexican brands like Coppel have focused on the omnichannel model to consolidate their market position, says Bernardo Bazúa, Director Digital and Omnichannel Strategy, Coppel. In Coppel's case, this includes physical stores, mobile applications, in-store kiosks, and a comprehensive website. This diverse network of channels enables Coppel to cultivate a close relationship with its clients, providing personalized and seamless shopping experiences regardless of the customer's chosen method or location of interaction with the brand. “Personalization is about understanding the customer and their life cycle. Personalization is a giant challenge in terms of data, but also a challenge of timing. In the desperation to retain a customer, you could be saturating them with information,” says Bazúa.

According to PwC, 56% of Mexican consumers say loyalty programs influence their purchasing decisions. These programs, when combined with high-quality customer service and exclusive offers, deliver not only savings but also a sense of belonging. Andrés Palacio, Director, Rappi Turbo Mexico, suggests that loyalty programs should offer more than the company’s core products, as strategic alliances can make them more attractive to customers. " At Rappi, we are broadening our scope so that the Rappi program offers more than just credits. Members can also redeem for miles, at retailers, and for gifts, which increases the overall benefits of the membership. We envision an ecosystem that includes gyms, courses, and other discounted services. Often, it is necessary to step outside one's unique system to generate larger ecosystems,” says Palacio. 

Experts agree that addressing customer experience and loyalty requires data management and the proper use of new technologies like AI and social networks. By integrating these technologies into their communication with customers, companies can even identify and create micro-trends, positioning themselves for further growth.