Will retailer loyalty programs save you money in the long run?

Best Buy Holiday Sales
Posted at 1:56 PM, Oct 11, 2021

With the pandemic still leaving many industry supply chains in disarray, some retailers have started Black Friday and holiday sales.

Best Buy is one company that's warning of product shortages and shipping delays as part of its annual membership program. It's giving members access to hard-to-find holiday items and special prices beginning next Monday.

Experts say other retailers will be introducing similar loyalty programs in the coming weeks. A recent survey from KPMG found that 55% of companies say they will have loyalty-specific marketing events during the holiday shopping season.

"What draws consumers the strongest motivating promotional activity are what we call temporary price reductions," said Julia Wilson with KPMG. "That can be a percentage discount or a dollar discount, and that's still the strongest draw is what we're seeing. Loyalty programs are also a core component to that marketing mix."

But are these loyalty programs worth your money?

For example, Best Buy's program includes an extended 60-day warranty and exchange window for most products in exchange for a $200 a year fee.

"When we think about what a consumer is looking for, they're definitely looking at the benefit to them versus that kind of the barrier to entry. So, whether it's a nuisance of filling out a form or paying a fee," Wilson said.

"I would say, though, that you need to be a loyalist to make it worth it, and I would also urge people to consider what might already exist in other formats," said Ted Rossman, a senior industry analyst at "You know, for example, a lot of credit cards will give you an extended warranty for free just by using the right card."

That means shoppers need to plan to buy multiple items from the same company within the next year to make a loyalty membership worth the investment.

"For more of the one-off items it may actually make more sense to either go through a credit card warranty or even just pay out of pocket, sometimes for a service plan," Rossman said.