In the retailing sector, consumers typically patronize multiple outlets, which confronts these outlets with an important issue: determining how to gain a greater share of consumer expenditures. One potential avenue is to increase repeat purchases through loyalty schemes. Therefore, this research examines the impact of loyalty programs on repurchase behavior in grocery stores.

Firms use customer relationship management (CRM) tactics to maximize customer retention rates and share of individual customers. In doing so, they use relationship marketing instruments, such as loyalty programs. They lie within the scope of defensive customer retention strategies, in that they are based on the conviction that retaining customers is less expensive than acquiring new ones (Reichheld, 1996).

For example, in Europe, the top 16 retailers collectively spent more than $1 billion in 2000 for the management of loyalty programmes (Reinartz & Kumar, 2002). Despite this intensive use, some practitioners have put forward that loyalty programs are ineffective (Verhoef, 2003). For this reason, some retailers, such as Safeway, have decided to give up their loyalty schemes to save $75 million per annum (The Wall Street Journal, 2000).
Other stores, such as E. Leclerc in France, continue to reinforce their marketing expenditures by devoting approximately €18 million to the management of their programme (LSA, 1999).

Considering these figures, the industry desperately needs rigorous empirical evidence of the effectiveness of loyalty programs. In 2004, the Marketing Science Institute (MSI), reflecting the opinion of both managers and academics, raised the topic of CRM and its associated issues (i.e., effectiveness of loyalty programs) to the standing of its capital research priority,.
Moreover, the Journal of Retailing devoted a special issue to customer loyalty to stimulate research on topics currently prominent in the minds of retailers, such as loyalty programs, drivers of store loyalty, and so forth (Grewal, Levy, & Lehmann, 2004).

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Do loyalty programs self-select the store’s heaviest purchasers andmodify the purchase behaviour ?.pdf