Targeting and personalisation reinforce loyalty in a Cost of Living Crisis

The Challenge	The Options	The Solution	The Outcome
4 in 5 Brits face a higher cost of living.	Retain loyal customers by offering personal perks.	Tiered loyalty app that offers: • No-cost sign-up for new customers • Personal perks for high-value VIP members	Spending is gamified.
2 in 5 are shopping around to save money, putting brand loyalty at risk.	Attract brand defectors from elsewhere with targeted incentives.	Millennials: Secure access and instant rewards.	Consumers see more value for long-term loyalty.
		Older Consumers: Price discounts and BOGOF deals.	Purchases are incentivised, instead of rewarding spend that would have happened anyway.

The decline of deep discounts

The post-pandemic period has been characterised by persistently high inflation. The monthly CPIH rate went above 2.5% in August 2021, and has remained there ever since.[1]

As a result, many UK households are living through a Cost of Living Crisis. A May 2026 House of Commons Research Briefing noted that 79% of British adults saw an increase in their cost of living in April 2026 alone.[2]

“The cost of living increased sharply in the UK during 2021 and 2022… Even though inflation is no longer as high, the cumulative effect of rising prices means households face a much higher cost of living than in 2021.”

– House of Commons Research Briefing, May 2026[3]

The briefing found that 40% of adults were “shopping around more” in April 2026 in an attempt to offset rising costs – presenting retailers with an opportunity to gain market share from rivals, but also the challenge to retain and reinforce loyalty among existing customers.

It’s a double-edged sword that MRM can help you to wield, using tiered loyalty schemes to target both groups with a single app that incentivises and rewards increased regular spend.

What is CPIH?

CPIH is the Consumer Prices Index including owner-occupiers’ Housing costs. It tracks CPI, home maintenance costs and changes in Council Tax, and is described by the ONS as “the most comprehensive measure of inflation”.

Year	2021	2022	2023	2024	2025
CPIH	2.5%	7.9%	6.8%	3.3%	3.9%

The table above shows trends in UK retail in the 12 months to April 2026. During the same period, spending at supermarkets fell 2.2%, but spending at food and drink specialists rose by 3.9%, with a 7.5% increase in volume of transactions.[3]

CPIH Annual Rate 2021-2025. Source: ONS[4]

The CPIH Annual Rate was especially high in 2022-23. It passed above 5.0% in February 2022 and remained there until October 2023, a 20-month period that peaked in October 2022 with CPIH hitting 9.6%.

What impact does CPIH have on retail sales?

The ONS Retail Sales Index tracks the value and volume of consumer spending in the UK. The gulf between the two since the onset of the COVID-19 pandemic is stark:

The value of retail sales is up by 25.8% (Feb 2020 – May 2026)[5]
The volume of retail sales is down by 0.4% (Feb 2020 – May 2026)[6]

In simple terms, UK consumers are buying less than before the pandemic, but are paying over a quarter more for their purchases – an increase of almost 26p on the pound.

What can retailers do?

The PwC Consumer Sentiment Survey for Spring 2026 found that 9 in 10 people cited the cost of living as their biggest concern, and 8 in 10 planned to reduce their spending during the three months after Easter.[7]

In response, PwC suggested that retailers “should look to appeal to loyal shoppers who are cutting back or trading down, to discourage them from switching retailers”.

“Retailers will need to continue to position on value – ensuring they have a range of products for those who plan to trade down, as well as catering for those who are going to protect their spending in areas like fashion, health and beauty.”

– Jacqueline Windsor, UK head of retail, PwC UK[8]

PwC added that targeted and personalised promotions can help to make shoppers “feel special” while rewarding continued loyalty.

Do customers want personalisation?

Yes – in fact, a report from EY called hyper-personalisation the “Holy Grail” when using data analytics to generate new levels of loyalty scheme success.

The National Centre for Social Research published a survey in July 2024 which showed that 72% of British shoppers were aware that supermarkets collect personal data about every transaction.[9]

Respondents generally said they were either comfortable or ambivalent towards retailers using their data to offer personalised perks or to understand their shopping habits.

Best of both: Tiered loyalty with personalised perks

Barclays’ Loyalty Schemes 2025 report, published in November, said: “Customers are accustomed to personalised offers, and there is now an expectation that businesses use the vast amount of data to deliver something that truly works for them.”[10]

The same report noted the increased prevalence of tiered loyalty schemes, where increased spend unlocks more prestigious perks and rewards – a kind of VIP hierarchy for loyal customers.

“Tiered loyalty schemes offer consumers long-term goals for what their points might one day add up to, with many happy to wait and accumulate points to get something truly memorable,” Barclays said.[11]

An alternative to subscription schemes

Subscription-based loyalty schemes, where consumers pay an upfront fee to access members-only pricing and perks, are one way to ‘lock in’ loyal shoppers.

According to Euromonitor, one in four of the biggest 100 brands on the planet offered a subscription loyalty scheme in 2026 – but there are alternatives.[12]

“Brands are tightening eligibility thresholds, introducing tiered access structures or tying benefits directly to usage, ensuring incentives are deployed only where they alter customer behaviour rather than subsidising outcomes that would have occurred in any case.”

– Euromonitor International, May 2026[13]

Two cohorts with one scheme

Tiered loyalty schemes, by their nature, incentivise and often gamify the process of spending more. Unlike subscription and membership models, they do not have an upfront cost barrier to joining.

As a result, they enable you to reach both cohorts with a single scheme:

No-cost entry-level membership with basic perks and discounts
Upper tiers that reward high spending levels with personalised bonuses

MRM operate both points-based and tiered loyalty programmes with a central dashboard to access and analyse all of the data collected about your members – giving you the edge you need to offer compelling, personalised and targeted rewards based on individual value.

Contact MRM for support with personalisation and targeting

To get started, contact MRM today and we can schedule a no-obligation 15-minute conversation to discuss your business goals.

From there, we can put together a package of promotional methods to deliver those goals. This can include developing a bespoke loyalty app for your brand, with points and/or tiers as appropriate.

We can also give you more information about Lodestone, our powerful promotion management software platform, which is where you can gather all the data you need to tailor the perks you offer to your members.