Loyalty Program for Retailers: What Top Brands Do Differently

The average consumer belongs to 17 loyalty programs, and they actively use a handful.

For retailers, that gap is the whole problem. Loyalty programs don't fail because the concept is wrong. They fail because the execution is generic.

Email can nudge customers back. Subscriptions can lock in revenue. But for retailers selling online, in-store, or both, loyalty programs are the only tool that combines data collection, repeat purchase incentives, and brand differentiation in one system.

This article breaks down the best loyalty programs by retail industry: coffee, beauty, fashion, grocery, wellness, and home electronics. Each example covers what they did, why it works, and what you can steal.

Three program types come up throughout: points-based, tiered, and paid membership. If those are new, our guide on what a loyalty program is covers the basics.

I. Why the Best Loyalty Programs for Retailers Work (And Most Don't)

Most retail loyalty programs fail for the same reason: they reward transactions, not relationships. A program that only offers points for purchases trains customers to wait for discounts. It builds price sensitivity, not loyalty.

The programs that work flip this. They make earning simple, create status worth chasing, and show up everywhere the customer shops. The difference looks like this:

The US loyalty market is projected to hit $41B in 2025. Most of that spending goes toward earn-and-burn systems on the left side of that table. The brands in this article all operate on the right.

You can measure the difference in four numbers: redemption rate, repeat purchase rate, customer lifetime value, and average order value lift. If your loyalty members aren't buying more often and spending more per order, the program isn't working.

Loyalty programs work best for retailers with natural repeat purchase cycles. If your average customer buys once every few years (furniture, appliances), a referral program may deliver more ROI than points. The brands in the next sections all share one trait: their customers have a reason to come back.

II. Loyalty Program for Retailers in Coffee & Food Service

Coffee and food service is where loyalty programs hit hardest. High purchase frequency, habitual behavior, and mobile ordering create the perfect conditions for a program that sticks.

1. Starbucks Rewards

Everyone thinks Starbucks Rewards works because of the stars. They're wrong. It works because Starbucks turned a loyalty program into a payment system, and then turned that payment system into a bank.

Here's what most people miss: Starbucks holds roughly $1.87 billion in customer deposits through stored value cards and its app.In 2024 alone, $207 million of that was "breakage revenue," money from balances customers loaded but never spent.Customers pre-load funds because the app rewards them with bonus Stars for doing so. Then Starbucks sits on that cash, interest-free, while customers slowly spend it down. That's not a loyalty program. That's a financial flywheel.

The numbers behind it:

• 35.5M active US members
• ~60% of US company-operated revenue comes from Rewards members
• 5.6x more likely to visit daily vs. non-members
• 44% customer retention rate, nearly double the industry average of 25%

But even Starbucks knew the old flat system was breaking. CEO Brian Niccol flagged the Rewards program as a "one size fits all" discounting mechanism during the Q3 2025 earnings call, signaling major changes for early 2026.

On March 10, 2026, Starbucks launched a full tier overhaul:

The big shift: earning is now tied to engagement, not payment type.Under the old system, you earned more Stars only by paying through the app. Now, Stars accelerate as your tier goes up, regardless of how you pay.

Starbucks also added a new 60-Star redemption tier ($2 off any item) in response to members asking for faster access to rewards.

The lesson for retailers isn't "copy Starbucks." It's this: the program works because it controls the payment flow. Mobile order-ahead creates a switching cost competitors can't replicate. The app becomes a daily habit, not a rewards tracker. And the prepaid balance ensures customers keep coming back because their money is already there.

2. Chick-fil-A One

Chick-fil-A has no drive-through tech innovation, no AI-powered personalization engine, and has spent most of its history without a delivery option. Yet it runs one of the strongest loyalty programs in food service, with over 50 million members enrolled since launching in 2016.

Why? Because the program does one thing extremely well: it makes earning feel fast and rewarding feel personal.

Members earn 10 points per dollar on every qualifying purchase, and rewards start at just 200 points. That means a $20 order gets you to your first reward. No waiting weeks. No complicated math.

The tier structure rewards consistency, not just spending:

The detail that matters: Silver members and above can gift rewards to others. This sounds small, but it turns customers into promoters. A free sandwich sent to a friend is word-of-mouth marketing that Chick-fil-A doesn't pay for.

Takeaways for coffee and food service retailers

• Control the payment flow

Starbucks proved the program works best when loyalty is at checkout. If you can get customers to pre-load funds or default to app payments, you create both a switching cost and a data advantage.

• Make the first reward fast

Chick-fil-A's 200-point threshold means customers see value on their first or second visit. A program that takes months to pay off loses people before they form a habit.

• Tie tiers to behavior, not just spending

Starbucks shifted from payment-type earnings to engagement-based earnings. Chick-fil-A rewards consistency with gradually increasing point rates. Both approaches recognize that frequency matters more than ticket size in food service.

• Give members a reason to spread the word

Chick-fil-A's reward gifting and Starbucks' curated experiences both create organic buzz that ads can't buy.

Even Starbucks, with $1.87 billion in customer deposits and 35.5M active members, rebuilt its entire program in 2026. If the biggest loyalty program in food service needs to evolve, every retailer does.

III. Loyalty Program for Retailers in Beauty & Cosmetics

Sephora's Rouge members make up just 6% of Beauty Insider's total base. Yet they over-index on sales, adopt new features first, and participate in every program event at the highest rate. That single stat explains why tiers work so well in beauty: customers don't just want discounts. They want status.

1. Sephora Beauty Insider

Beauty Insider hit a record 45 million members in North America in 2025.The program drives 80% of Sephora's North American sales and has produced a 22% increase in cross-sell revenue and up to 51% in upsell revenue.

The tier structure:

What makes this different from a standard points program? Sephora barely discounts. The company limits sitewide sales to twice a year. In August 2025, Sephora hosted its second annual Rouge Celebration, a four-day event exclusively for Rouge members, with no sitewide discounts at all.

Instead, it offered exclusives, masterclasses, and quadruple points on Sephora Collection. The result: double-digit year-over-year sales growth, with average order volume up more than 40%.

That's the model beauty retailers should study. Sephora doesn't buy loyalty with discounts. It earns it with access, education, and the feeling of being part of something.

2. Ulta Beauty Rewards

Ulta's loyalty program has 44.6 million active members, and over 95% of total sales come from them.By mid-2025, that number reached a record 45.8 million. By late 2025, Crain's reported 46.3 million members, representing 13.5% of the entire US population.

Ulta takes the opposite approach to Sephora. Where Sephora limits discounts and leans on experiences, Ulta converts points directly into dollars off. The points-per-dollar rate changes almost daily, gamifying the app and keeping shoppers engaged. Customers discuss strategies on TikTok and Instagram, sharing how to get a $600 Dyson hot tool for a fraction of the cost.

The top 20% of program members drive 80% of Ulta's revenue. That's the 80/20 rule in action.

3. Allbirds (Joy customer): Proof it works at a smaller scale

Most retailers reading about Sephora and Ulta will think: "That's nice, but I'm not a $12 billion company." Fair point. Here's a mid-market example.

Allbirds Korea (100,000+ orders/year, online + POS) launched its first loyalty program using Joy. Three tactics drove early success:

• Pre-loaded points from purchase history

Joy calculated loyalty points from each customer's past orders, so every customer who opened their account found points already waiting. Zero friction to start.

• Cashiers are trained to promote the program in-store

Staff had the tools and knowledge to introduce benefits at checkout, turning every transaction into a sign-up opportunity.

• Tier-based automatic discounts (1% to 5%)

The lowest tier got 1% off, the highest got 5%. They also ran a double-points campaign for a limited window to boost initial engagement.

No massive tech budget. No custom app. Just simple execution using tools available to any Shopify retailer.

Takeaways for beauty and cosmetics retailers

• Tiers create aspiration, not just savings. Sephora's Rouge members spend $1,000+/year partly because they want to stay Rouge. The status is the reward. If you sell beauty products, atiered loyalty program is your highest-value play.
• Pick your model: access or discounts. Sephora limits sales and sells exclusivity. Ulta gamifies discounts and turns saving into a social sport. Both work. The wrong move is trying to do both at once.
• Collect zero-party data early. Beauty is personal. Skin type, shade preferences, fragrance profiles. Use quizzes and profiles to collect this data through your loyalty program, then use it to personalize recommendations.
• You don't need enterprise scale. Allbirds proved that training cashiers, pre-loading points, and running tier-based discounts drive engagement at 100K orders/year, not just at 45 million members.

IV. Loyalty Program for Retailers in Fashion & Apparel

Most fashion loyalty programs get one thing wrong: they treat every customer like a discount hunter. Nike proved you don't need points at all. Kohl's proved that discounts can work, but only if you build a return trip into the math.

1. Nike Membership

Nike doesn't have a traditional loyalty program. No points. No tiers. No punch cards. And yet, Nike App members spend 3x what guest shoppers spend on Nike.com. The company has more than 300 million members, and member demand growth outpaced total digital growth, hitting a record $3 billion in a single quarter.

How does a free program with no points drive that kind of spending?

The answer is access. Nike Membership is built around four connected apps, each serving a different customer need:

Nike's loyalty machine runs on three fuels: access, identity, and seamlessness. Members get exclusive drops before the public, personalized product recommendations, and a fitness ecosystem that keeps them engaged daily, even when they're not shopping. The SNKRS app alone went from $70 million to $700 million in annual revenue in five years, driven entirely by exclusive access, not discounts.

The lesson for fashion retailers: if your product has any cultural or identity value, you don't need to discount it. Give members first access. Make them feel like insiders. The spending follows.

2. Kohl's Cash

Nike works for aspirational brands. But what about retailers competing on value? Kohl's Cash is the counter-example.

In 20 years, Kohl's has issued more than $25 billion in Kohl's Cash to millions of customers. The mechanics are simple: earn $10 for every $50 spent during promotional periods, then redeem that Kohl's Cash on a future visit within a set window.

The detail that makes it work is the expiration window. You earn Kohl's Cash this week, but you can only spend it next week. That creates a forced return visit that the customer didn't plan. Shoppers, on average, spend 38% more than the value of the coupon when redeeming rewards. Kohl's Cash doesn't just reward loyalty. It engineers a second trip.

Rewards members earn 5% back on every purchase (7.5% with a Kohl's Card), issued as Kohl's Cash in $5 increments on the first of each month. That monthly cadence keeps customers checking back.

The honest caveat: GlobalData's Neil Saunders noted that Kohl's Cash is strong for core customers and has likely prevented sales from falling further, but it can't save the business if the core proposition isn't fixed. Loyalty programs amplify what's already working. They don't replace a weak product or store experience.

Takeaways for fashion and apparel retailers

• If your brand has identity value, don't discount it. Nike's entire loyalty model is built on access and exclusivity, not price cuts. Members spend 3x more because they feel like insiders, not because they're saving money.
• If you compete on value, build a return trip into the reward. Kohl's Cash works because the earn/redeem window forces a second visit. If you give instant discounts, you get a bigger first order, but no reason to come back.
• Make the program part of the daily experience. Nike Run Club and Training Club keep members engaged between purchases. For fashion retailers, think content, styling tools, or early access to drops rather than just transaction-based rewards.
• Loyalty can't fix a broken experience. Kohl's Cash is iconic, but analysts note it's not enough if the store experience, assortment, or brand positioning isn't right. Get the fundamentals in place first.

V. Loyalty Program for Retailers in Grocery & Pharmacy

Grocery is the highest-frequency retail category. The average household visits a grocery store 1.6 times per week. In coffee or fashion, the challenge is getting customers to come back. In grocery stores, they're already coming back. The challenge is making sure they come back to you.

1. Kroger Plus: The Data Flywheel

Most grocery loyalty programs offer the same deal: scan your card, get the sale price. Kroger does this too. But the real program runs underneath.

Over 95% of Kroger's transactions are linked to a loyalty card. That means Kroger knows what nearly every customer buys, how often, and in what combination. Their in-house analytics firm, 84.51, uses purchase data from 60 million households to build personalized campaigns and delivers more than 3 billion personalized recommendations annually.

The result:

Kroger's digital coupon redemption rate reportedly hits 65%. The national average is around 5%. Not because Kroger's coupons are more generous. Because they're more relevant. A coupon for something you actually buy gets used. A generic "$0.50 off brand X" gets ignored.

2. Amazon Prime: Making Leaving Expensive

Amazon Prime isn't a grocery program. But for 200+ million members, it functions like one, and it shows a loyalty mechanic every retailer should understand.

Prime members spend an average of $1,400/year on Amazon vs. $600 for non-members. The renewal rate after one year is 94%. After two years, 98%.

That spending gap isn't because Prime members love Amazon more. It's because Prime changes the cost of not using Amazon. Once you've paid $139/year, every purchase somewhere else feels like wasted money. Free same-day Whole Foods delivery over $35, two-hour grocery delivery in select areas, plus streaming and photo storage. The bundle pays for itself within a few orders. After that, shopping elsewhere feels irrational.

Kroger uses data to make the experience better. Amazon uses sunk costs to make leaving harder. Different psychology, same outcome: the customer stays.

If you're considering a paid loyalty tier, this is the bar: customers should feel like they're getting away with something within the first month. Amazon doesn't hope you'll see the ROI eventually. They stack benefits, so the math is obvious after two or three deliveries.

Takeaways for grocery and pharmacy retailers

• Personalize, don't just discount

Kroger's 65% coupon redemption vs. 5% nationally proves it. A relevant $0.50 coupon outperforms a generic $2.00 one. If your program sends the same offers to everyone, you're wasting margin.

• Tie loyalty to a recurring expense

Kroger links grocery spending to fuel savings. That makes the program feel valuable even when nothing's on sale. Find the equivalent in your category: delivery fees, subscriptions, consumables.

• Front-load value in paid tiers

Boost shows savings on the first fill-up. Prime pays for itself in weeks. If your paid tier takes six months to feel worthwhile, customers will churn before they get there.

• The card isn't the product. The data is

What you do with purchase history (personalized offers, smart recommendations, inventory decisions) is the actual loyalty program. Even small retailers can start simple: "Last month you bought X. Here's 10% off Y, which pairs well."

VI. Loyalty Program for Retailers in Health, Wellness & Fitness

Wellness brands have an advantage most retailers don't: their products are tied to identity. People don't just buy supplements or yoga pants. They buy into a version of themselves.

A loyalty program in this category doesn't compete on price. It competes on how well it reinforces the customer's self-image.

That's why the best wellness loyalty programs reward consistency, not just spending. And why referrals matter more here than in almost any other category.

Lululemon Membership: Lifestyle First, Transactions Second

No points. No cashback. No earn-and-burn. Lululemon runs three spend-based tiers:

Partner perks include Peloton, ClassPass, Barry's, AG1, Sweetgreen, and Oura.Not big discounts. Lifestyle signals: "We know who you are."

The program has critics. Most partner offers are one-time trials, and the overall value feels lightweight. But Lululemon isn't competing on rewards. They're betting that community and early access keep customers paying $128 per item without a discount.

One expensive lesson: the $500M Mirror acquisition flopped. Lululemon abandoned the hardware and partnered with Peloton instead. Lifestyle loyalty works. Forcing a new product category to drive it doesn't.

Takeaways for health, wellness, and fitness retailers

• Reward consistency, not just spending. Subscription streaks, milestone bonuses, and refill reminders align the loyalty program with how people actually buy in this category. A customer who's maintained a 6-month streak is more valuable than one who placed a single large order.
• Use referrals aggressively. Wellness products spread through personal recommendation. Build the referral reward into your loyalty program so it's one system, not a bolt-on. Give both sides a real incentive.
• Partner with adjacent brands. Lululemon's Peloton, ClassPass, and AG1 partnerships cost them almost nothing but signal lifestyle alignment. A supplement brand could partner with a fitness app, a meal prep service, or a meditation tool. The perks don't need to be expensive. They need to be relevant.
• Don't force engagement outside your strength. Lululemon's $500M Mirror acquisition failed because making hardware isn't what they're good at. Stick to your core product. Partner for the rest.

VII. Loyalty Program for Retailers in Home & Electronics

Home and electronics is the hardest category for loyalty. A customer buys a TV or a smart home hub, then disappears for two years. Points-per-dollar breaks down when there's nothing to spend on.

So how do you build loyalty when customers only show up twice a decade? Best Buy's answer: make the program about what happens after the sale.

Best Buy: Loyalty as Product Protection

Most electronics retailers try discount-based loyalty. Best Buy flipped the model. Its paid tier (My Best Buy Total, $179.99/yr) bundles Geek Squad support, product protection including AppleCare+, and member pricing into one annual fee. Over 100 million members sit across its three tiers.

How Best Buy's Membership Tiers Work

The trick is economic framing. AppleCare+ on a single iPhone costs about the same as the entire Total membership. Buy two devices a year and the math sells itself. Best Buy turned the warranty upsell, something customers grudgingly pay for, into a membership that feels like a bargain.

This also solves frequency. Between purchases, members still call Geek Squad, get repairs, and browse member-only deals. The relationship stays active even when nothing's in the cart. Retention rates are outperforming Best Buy's own expectations, with paid members showing higher engagement and increased spend.

Why This Works for Low-Frequency Retail

The deeper lesson: when purchase frequency is low, loyalty wraps around the product lifecycle, not the shopping cart. Support, protection, setup help -- these keep the brand relevant during the long silence between transactions.

Honesty caveat: this model needs scale. Best Buy can staff a 24/7 Geek Squad because it has 100M+ members subsidizing it. Smaller electronics retailers apply the same principle differently: free setup consultations, extended return windows, or priority repair scheduling for members.

Takeaways

• Wrap loyalty around ownership, not shopping. When customers buy twice a decade, service beats discounts. Protection, support, and setup keep the brand alive between purchases.
• Frame membership as obvious math. One protection plan costs as much as the whole membership. Let customers do the ROI calculation in their heads.
• Stay useful between purchases. Tech support, exclusive deals, and repairs maintain the relationship when the shopping cart is empty.
• Know when points don't fit. For truly low-frequency categories, a paid membership or referral program may beat earn-and-burn. Match the mechanic to the buying cycle.

VIII. The Brands That Win at Loyalty Didn't Get Lucky

Starbucks built tiers around visit frequency. Sephora turned spending into status. Nike replaced discounts with access. Kroger turned a plastic card into a data engine. Best Buy made product protection the loyalty program.

They didn't copy each other. They picked the model that matched how their customers buy and committed to it.

The common thread: simple to join, obvious value, fast, promoted at every touchpoint.

If you're still exploring, see how real Shopify stores run their programs. Ready to build? Joy gives you points, tiers, referrals, and POS sync in one app with a free plan to start. Want help designing yours?Book a demo.