TORONTO — Canadian consumers are increasingly choosing to shop at discount retailers and low-price warehouse stores, although well-established retailers with strong brands and their own loyalty strategies continue to be well-represented, according to a recent study on customer loyalty factors carried out by the research firm Colloquy.

Canadian consumers are increasingly choosing to shop at discount retailers and low-price warehouse stores, although well-established retailers with strong brands and their own loyalty strategies continue to be well-represented, according to a recent study on customer loyalty factors carried out by the research firm Colloquy.

The 2010 Colloquy Retail Loyalty Index study of 3,500 Canadians showed that when consumers were asked for the factors that most influenced their loyalty to a retailer, they revealed a major shift in their views since 2008. The importance of customer service dropped 18% among the general population, falling to second place behind competitive price.

In 2008 virtually all demographic groups ranked customer service the most important factor in gaining and keeping their loyalty, with competitive price finishing a distant second.

"While the recession played a major role in driving consumers to low-price stores, even as the economy recovers, the need to deliver a good customer experience and value is the new normal for all retailers," said Kelly Hlavinka, author of Colloquy Canadian Retail Loyalty Index and Colloquy partner.

"But value doesn’t just mean low prices. Stores that can identify the shoppers that contribute most to their bottom line, and how to satisfy them, stand the best chance of survival and success," she added.

The study indicates that among grocery chains the discounters in Ontario lead the pack, with Zehrs ranking highest for customer loyalty and nofrills topping the charts in frequency. Similarly, in western Canada, Costco is the index leader, with Safeway winning the frequency race. On the other hand, in Quebec, IGA tops both scores as does Sobeys in Atlantic Canada. In Quebec, Loblaws (loyalty) and Metro (frequency) emerge as strong second place finishers.

In the pharmacy category, discounter Zellers narrowly beat out Walmart Supercenter, Shoppers Drug Mart/Pharmaprix and Rexall in the loyalty race in Ontario. Shoppers Drug Mart is cited as the most frequented drug store. In Quebec, Jean Coutu topped both frequency and loyalty scores, as did Shoppers Drug Mart/Pharmaprix in Atlantic Canada. In western Canada, discounters reign supreme, with Costco again topping the loyalty category and Walmart attracting shoppers most frequently.

The report also examines the factors that drive loyalty among the subset of consumers most likely to recommend a retailer, which is a standard way of gauging loyalty. The report illustrated that in the grocery category, "value for money" and "product quality" topped all other loyalty drivers, with "pleasant store environment" and "knowledgeable staff" lagging behind.

On the other hand, in the pharmacy category, "pleasant store environment" topped the list, suggesting the importance of what is delivered and how it is delivered, not just the price.