Independent retailers across Australia are under more pressure than ever. Rising costs, tighter margins, and aggressive loyalty programs from major chains like Coles and Woolworths make it harder to compete on price alone.
Many independent retailers already run loyalty programs that reward customers with points. But while points remain a powerful way to encourage repeat visits, points on their own don’t create growth. The real opportunity lies in what those points reveal.
In 2026, the independent retailers who win on loyalty will be the ones who truly understand their customers and use that insight to drive smarter, more relevant loyalty experiences.
The Real Loyalty Challenge Facing Independent Retailers
For independent retailers today, loyalty is no longer optional. It’s a baseline requirement and customer expectation. As technology reshapes how customers shop and choose where to spend, retailers without a loyalty program risk becoming invisible.
A recent study by the Australian Loyalty Association supports this, highlighting that:
- 89% of grocery customers say loyalty programs influence their purchase decisions
- 83% of grocery customers are already members of at least one program
For retailers with an existing program, their challenge is understanding how to use a loyalty program effectively. Too many programs stop at the points accumulation, offering little insight into who customers are or what drives their behaviour. Without meaningful customer insight, a loyalty program can become a passive system that records transactions rather than drives growth.
Points Still Matter – But They’re Only the Starting Point
Points remain one of the simplest and most effective loyalty mechanisms in retail. They’re easy for customers to understand, simple to communicate in-store, and proven to encourage repeat behaviour.
The problem isn’t points – it’s what happens (or doesn’t happen) after they’re earned.
When points are treated purely as a balance on a receipt, their potential is wasted. When they’re treated as a signal of customer behaviour, they become far more valuable.
Points can help reveal:
- How frequently customers shop
- How much they typically spend
- Which categories they buy from
- How they respond to offers or incentives
This is where loyalty shifts from being transactional to strategic.
Why Knowing Your Customer Is The True Competitive Advantage
Australia’s major retailers operate highly successful loyalty programs because of their obsession with understanding customers at scale.
They know:
- Who shops weekly versus occasionally
- Which customers are most profitable
- What triggers larger baskets or more frequent visits
- Which offers drive real behavioural change
Historically, this level of insight has been difficult to access for independent retailers. Loyalty programs collected data, but it was often siloed, incomplete, or too hard to see.
That gap is now closing.
Turning Loyalty Insight into Measurable Growth
When independent retailers understand their customers, loyalty programs become a tool for growth rather than just retention.
Examples include:
- Rewarding frequency, not just spend, to increase visit cycles
- Identifying high-value customers early and keeping them engaged
- Targeting offers based on real shopping behaviours
- Encouraging larger baskets with spend-based incentives
These are practical strategies adopted by major retailers that also work at an independent scale when powered by the right insight.
Competing on Loyalty Without Competing on Scale
Independent retailers don’t need to outspend the majors to compete on loyalty. They need to be more relevant.
Smaller retailers are often better placed to:
- Build genuine relationships with customers
- React quickly to local shopping trends
- Offer meaningful rewards rather than blanket discounts
When loyalty programs are informed by real customer behaviour, independent retailers can deliver experiences that feel even more personal.
That relevance is what keeps customers coming back.
The Future of Loyalty for Independent Retailers in 2026
The future of loyalty is about making points smarter.
As loyalty programs evolve, successful independent retailers will:
- Use points as both a reward and data signal
- Remove friction from earning and redeeming
- Focus on understanding customers, not just counting transactions
Loyalty shouldn't be about just giving something back, it's about learning, adapting, and building lasting customer relationships, one transaction at a time.
For independent retailers, loyalty growth starts with visibility. When you understand who your customers are and how they shop, points stop being a cost and start becoming a competition advantage.