How do retailers integrate one loyalty programme into another?

Mergers and acquisitions (M&A) are a fact of life in today’s grocery industry. In the past 12 months alone, for instance, ALDI acquired Winn-Dixie and Harveys Supermarket in the Southeastern US, Sainsbury’s purchased 10 locations from Homebase in the UK, and Carrefour added 60 hypermarkets and 115 supermarkets to its portfolio thanks to a deal with Louis Delhaize. Little surprise, then, that the global retail sector saw a twofold increase in M&A deal values¹ between 2023 and 2024.

There are plenty of questions that retailers need to ask before deals of this kind can go through. "Have we done our due diligence?" for instance. "Will our cultures align? How will the deal be structured?". Other than for a very specific group of people, however, "what will happen with our loyalty programme?" typically isn’t one of them.

And yet, there’s every reason that it should be. As revealed in our Power of Personalised Loyalty report, companies that get loyalty right can boost their profitability by more than 40%. Maintaining that opportunity throughout the process of a merger or acquisition should be at the top of the agenda. So, with that in mind, let’s look at how retailers can successfully integrate one loyalty programme into another.
 

Brand strategy before all

Depending on your overall familiarity with the field of data science, it may surprise you to learn that the merging of two loyalty programmes isn’t a data-centric challenge—not primarily, at least. Certain issues do need to be taken into account (not least the handling of sensitive customer information), but the main issues here aren’t driven by data. Instead, the main challenges revolve around subjects like brand strategy, customer impact, and operational capacity.

Let’s start with the first: brand strategy. It’s a generally accepted fact that no two companies share the exact same positioning. There may be overlap, but two different organisations will inevitably have their own proposition to the market. As a result, when two retailers join forces—either through merger or acquisition—two different brand strategies also need to be knitted together.

There are many possible outcomes here. Some retailers might choose to make their merger or acquisition "invisible" to end customers, for instance, combining strengths behind the scenes but with no explicit change in their individual positioning. Others might instead choose to make it public, perhaps even actively promoting the change to customers. And, in the event of an outright acquisition, there may simply be no choice; folding one brand into another is unlikely to go unnoticed, after all.

Whatever the result, working out what this new, unified entity will stand for is a critical first step—and that’s because loyalty programmes tend to be heavily aligned with a brand’s strategic focus.

Say that convenience is one of a retailer’s main differentiators, for example. To support that through their loyalty programme, they might focus on delivering rewards that are quick and easy to redeem. If sustainability is part of a retailer’s brand positioning, they might focus on eco-friendly rewards or offer carbon offset coupons to shoppers. The specific circumstances might vary, but a good loyalty programme typically serves as a reflection of the brand as a whole.

Because of that, setting a unified strategic vision first is essential when two companies unite. Not only does it help to solidify the new brand’s "promise" to customers, it provides the framework on which a successful loyalty programme can be built, too.
 

Data, rewards, and management: three key considerations

Naturally, the choices you make around brand strategy can have a significant impact on the shape that your new, integrated loyalty programme takes—and three issues warrant specific discussion.

1. Data sharing between retailers
   The "value exchange" between customers and retailers is fundamental to any loyalty programme’s success. By sharing their data, shoppers (rightfully) expect to receive a better, more rewarding, and more personalised service in return. When different retailers come together, though, it raises a number of onward questions about how their customer data can be used.

   This is where terms and conditions become so important. If data is to be aggregated across multiple banners, new permissions will need to be sought. The same is true if an existing loyalty programme is being folded into a new one—you may be acquiring new customers, but you’re not automatically acquiring their consent. If in doubt, it’s always better to assume that you don’t have the right to use someone’s data without establishing new terms and conditions first.

   If anything, the creation of a unified loyalty programme gives retailers an excellent opportunity to review their relationship with customer data as a whole. From how data is collected and how it is used, even through to how it is organised, this is a great time for retailers to ensure they have sufficient consistency and accuracy across their (combined) dataset.

2. Parity of rewards and points
   Another subject that requires a good deal of thought is the accrual and redemption of rewards. Consider this example: a discount retailer is acquired by a mainstream supermarket operator. The two brands remain distinct, but their loyalty programmes end up merging. Should customers earn rewards at the same rate across both banners? Can they accrue points in the mainstream supermarket and then cash them in at the discounter? Is that fair? Is it financially viable?

   The answer to those questions isn’t necessarily "no". This is why the integration of loyalty programmes needs to be a customer-led activity. A good loyalty experience doesn’t have to be a homogenous one; instead, it should respect the preferences of different audiences. The challenge then is to ensure that one brand doesn’t "win" at the expense of another.

   In the example above, for instance, the supermarket and discounter would need to go into that relationship with a clear understanding that customers interact with their loyalty schemes in fundamentally different ways. Acknowledging that shopper needs differ across brands is vital to the creation of a successful long term strategy.

3. Brand management and operational capacity
   Finally, there are the raw logistics of loyalty to consider. Say that you plan on rolling multiple programmes into one, with the intention of providing customers with a unified, multifaceted loyalty experience. By doing so, you’re essentially creating a brand in and of itself—one that will need to be messaged and managed much the same way that a retail banner would.

   Keeping loyalty programmes separate isn’t necessarily any easier, however. If you acquired four small grocery chains, each with its own loyalty programme, you’d then need to ask if you had the operational capacity to manage those schemes independent of one another.

Every approach comes with its own pros and cons. What’s important is to work which will deliver the best results for customers based—which means being able to manage that activity successfully.

Integrating loyalty programmes will never be a simple task. At the same time, nor does it have to be a needlessly complex one. By taking things one step at a time—and thinking logically about the best way to proceed—merging and acquiring retailers can turn a daunting prospect into a manageable process. Most importantly of all, by remaining true to what’s right for their customers, they’ll come out of that process stronger, too.
 

1 M&A in Retail: A Rebound—and No Sign of Letting Up – Bain & Company, 4th February 2025