Rethinking Retail Loyalty: Why Travel Rewards Could Be the Next Big Strategy

American consumers have become value-obsessed, shaping their shopping behaviors. In the last quarter of 2024, McKinsey reported that 74 percent of U.S. shoppers admitted to trading down — i.e., switching retailers, delaying purchases, or seeking better value — despite spending more overall than in previous years when adjusted for inflation. However, with recent reports showing that U.S. retail sales declined more than expected in January, retailers face a paradox: How do they deliver recognizable value when they can’t compete on price?

Beyond Points and Discounts: The Loyalty Shift

The average American is enrolled in 18 loyalty programs but active in only half. Clearly, transactional rewards are no longer enough to build deeper customer connections; experience-driven incentives are necessary.

Banks and credit card companies have long leveraged travel perks to attract and retain customers, yet these rewards remain underutilized in retail despite consumers’ continued appetite for travel. According to Hopper, nearly a quarter of Americans plan to increase their travel spending in 2025, and 53 percent plan to maintain their 2024 levels. Integrating travel rewards into retail loyalty programs can help consumers achieve their travel aspirations, improving brand engagement and increasing perceived value.

Related story: 3 Loyalty Tools for Creating Year-Round Retail Customer Engagement

Palpable Demand for the Right Offer

A recent arrivia survey found that 75 percent of retail loyalty members would book a trip through their programs if given the option, highlighting a significant opportunity for differentiation.

Millennials and Gen Z, known for prioritizing experiences, showed the strongest interest in travel rewards. Meanwhile, families with children valued convenience features like flexible payment options and core travel products such as hotel stays and airfare, underscoring the need for personalized, flexible travel rewards.

Retailers can capitalize on this demand by partnering with travel loyalty programs that offer artificial intelligence-driven recommendations, dynamic pricing models, and flexible redemption options.

Specialty Retail: A Natural Fit for Travel Rewards

Certain retail categories are particularly well-positioned to benefit from travel rewards. Nearly 90 percent of luggage buyers in the arrivia survey expressed strong interest in booking travel through their loyalty programs. Similarly, 66 percent of outdoor/adventure shoppers and 64 percent of health and wellness brand members found the idea appealing.

Retailers with travel rewards programs can engage these customers by tailoring incentives to fit their brand. A premium fitness chain might offer discounts on wellness retreats. A luggage company could partner with airlines for free checked bags. An outdoor retailer might create exclusive adventure travel packages. Matching travel rewards to a retail brand's identity keeps it relevant and strengthens customer relationships.

Travel Rewards: A New Revenue Play

Beyond strengthening engagement, travel rewards present a lucrative revenue opportunity. Retailers using white-label travel booking platforms can profit from supplier-funded discounts. For example, if a platform negotiates a 35 percent hotel discount, the retailer could pass 25 percent to loyalty members while keeping the remaining 10 percent as profit.

Owning the booking experience allows members to earn points on travel purchases. According to arrivia, 53 percent of customers would reinvest earned points into additional brand purchases, rising to 75 percent for loyalty members and 62 percent for outdoor/adventure shoppers. This demonstrates how travel rewards can drive incremental sales, particularly in high-spend, low-frequency categories.

Adapting to Consumers’ Expectations

Retail loyalty programs must adapt to meet today’s price-sensitive consumers. Nearly half of those polled by arrivia said they were looking for more ways to save with their loyalty programs, while 46 percent sought additional earning opportunities. Travel rewards provide a compelling way to connect passion with purpose, align with brand identity, and sustain long-term engagement through added value. As competition for customer loyalty intensifies, integrating these benefits into retail programs could be a game-changer, transforming sporadic transactions into lasting relationships.

Jeff Zotara is the chief marketing officer of arrivia, a travel loyalty platform that helps businesses attract, engage and retain customers, members or employees through exclusive travel benefits.