Apparel Group chairman Nilesh Ved said the company's new offering will work in all its branded outlets in the UAE. Image Credit: Supplied picture

Dubai: Club Apparel, a new loyalty programme that works through mobile phones, has just been launched in Dubai by the Apparel Group, one of the largest branded retailers in the GCC.

A new technology that works through mobile phones makes this programme possible. Customers, once becoming a member, will get one point for each Dh1 spent on any purchase from any of its 275 retail outlets in the UAE.

"It's no cards and only rewards," Nilesh Ved, chairman of Apparel Group, told Gulf News.

"It's a totally new technology that works with cell phones. The mobile phone replaces the loyalty card. So, no need to carry a card," Ved said.

"In any case, these days people do not have space in their wallets to carry more plastic cards. Your [mobile phone] becomes your loyalty card and will hold the points."

The rewards are instant and redeemable.

Once the customer spends a certain amount shopping, the customer's mobile phone is synchronised with Club Apparel following his acceptance of the terms and conditions.

The cell phone becomes the "mobile wallet".

Then every time the customer makes a purchase, the points are added to the mobile wallet that could be redeemed in the next purchase.

The programme is being launched in the UAE for now. However, it will later be applied to 570 stores in 14 countries where the group has its footprint.

Analysts believe loyalty programmes create a win-win situation for both the retailers and customers where the companies benefit from higher transactions while customers get value addition.

"Our studies show that companies sometime achieve 50 per cent additional [sales] through loyalty programmes," Prosenjit Raha, managing partner of Just BTL, a Dubai-based loyalty programme developer, told Gulf News.

Simple mechanism

Ved added that "the programme has been inspired by the customers. We wanted to reward them, with a simple and easy-to-use mechanism."

Apparel Group, formed in the late 1990s, represents a chain of international brands including Nine West, Tommy Hilfigar, Promod, Mango, Kenneth Cole, La Senza, Bench, Basler, Inglot, Jeanswest, Baly, Aldo, Sketchers, Venezia, Dune and Bookplus, among many others.

The loyalty programme will work across all its branded outlets.

Ved said his company has 80,000-strong customer database in the UAE on its loyal customers.

"We have not been doing much for our customers. In this way, we will be able to give something back to our customers. However, we waited for the right technology," Ved added.

Raha said that retailers were now focusing on resident traffic that is prompting more loyalty programmes, following with a decline in tourist traffic.

"Due to a decline in the tourist traffic, the entire retail and loyalty business is currently undergoing a transformation, prompting retailers to shift focus to the resident traffic," Raha said.

"Resident purchases as percentage of the sale basket have increased in recent months. That's why there is a renewed focus on resident buyers."

Ved said the first quarter of the year had been the best so far since the company was formed, in terms of sales.

"Although the financial crisis has impacted the business, the first quarter of the year has been very good — in fact the best in our history," he said.

"However, due to the ash cloud, April sales [were] slightly down."

First-quarter sales were pushed up by the Dubai Shopping Festival, he said.

"However, challenges remain, going forward. It will be a challenging year, especially during the summer. We expect sales to pick up around September," he said.

The retail veteran said market recovery would happen surely but slowly.

"I don't expect the markets to return to the 2007-08 level, although recovery will take place in the coming years," Ved said.

Despite the challenges, the Apparel Group is opening about 75 stores in 2010 and 2011. It has already opened 15 stores at Mirdif City Centre.

Last year, the company introduced Aeropostale — an international brand with 940 stores in the United States. "We will continue to bring new brands to the region — the right brands," he said.

Leasable mall space

Despite the current econ-omic downturn, some 10.3 million square metres of mall gross leasable area (GLA) was completed across the GCC in 2009 —up from 9.5 million square metres a year ago, according to UK-based consultancy Retail International.

A further 8.5 million square metres is under development or in the detailed planning stages. These developments will give fresh impetus to the sector's growth in the coming years.

While Dubai continues to feature, the greatest growth in percentage terms over the next five years is expected to come from Abu Dhabi and Doha in the Gulf, and Tripoli, Libya in North Africa, it said.

The Dubai Chamber of Commerce and Industry recently reported that total retail spending in Dubai will increase by around 4 per cent in 2010 and by more than 8 per cent in 2011.

Dubai Marketing programmes are designed to enhance brand loyalty by cultivating an ongoing relationship between marketers and their customers.

Successful loyalty programmes encourage consumers to buy frequently, to increase the amount spent each time, and to concentrate all or most of their related purchases on that brand.

Most loyalty programmes offer perks for membership in a club or programme and reward purchases, according to answers.com web portal.

Rewards may be based on the local currency or US dollar value of purchases or on the frequency of purchases.

The best-known loyalty programmes are airline frequent-flyer programmes that offer discounts for future travel called air miles.

Most large supermarket chains now have frequent-buyer clubs that offer no-coupon discounts as well as newsletters and affiliate discounts. Loyalty programme tactics also include regular communication with customers such as reminder mailings, private credit cards, cross-sell and up-sell offers, satisfaction and opinion surveys, and collection of information for member databases.

In 1929, Betty Crocker issued coupons that could be used to redeem items like free flatware. In 1937 the coupons were printed on the outside of packages, and later the Betty Crocker points programme produced a popular reward catalogue from which customers could pick rewards using their points.

In 2006, it was announced that the Betty Crocker Catalog was going out of business and that all points needed to be redeemed by December 15, 2006 — ending a 77-year tradition.

On May 1, 1981 American Airlines launched the first full-scale loyalty marketing programme of the modern era with the AAdvantage frequent flyer programme.

This was the first to reward "frequent fliers" with reward miles that could be accumulated and later redeemed for free travel.

Do you think loyalty programmes give better value for money? Or are they a marketing gimmick? Would you apply for one? Tell us by clicking the "post a comment" link below.