Gamification in retail: Types, benefits, examples

Gamification in retail isn’t anything new. Back in the late 1960s, for instance, when the average gas price was 35 cents, Shell filling station customers were given paper packets containing one of 39 “Mr. President” collector coins with the chance to win prizes of up to $5,000.

In 1987, McDonald’s served up its first Monopoly promotion, where diners peeled stickers from items they ordered to win instant prizes, or collected sets of stickers associated with properties like Boardwalk and Park Place in the popular Hasbro board game.

Back then, programs such as these were simply promotions. But today, building on years of consumer experiences with video and computer games, it’s known as gamification in retail.

What is retail gamification?

Retail gamification is the integration of fun, challenging, and sometimes addictive game-like elements and mechanics into retail environments – most often loyalty programs – to drive customer engagement, loyalty, and certain repeat behaviors.

Consumers are rewarded with discounts, free items, early access to products or promotions and other prizes for reaching certain milestones in these competitions. In the old days, games were largely paper based. But since the rise of smartphones, many gamified programs are fully digital or come with digital access options.

Gamification has become so central to retail marketing that it’s driven a large industry dedicated to delivering fresh concepts along with supporting technologies and services.

ReportLinker.com says the global gamification market across all industries hit $18.63 billion this year, up 25% from $14.87 billion in 2022.

“Gamification has been in place for many years, and it’s going to continue to grow because it’s almost become part and parcel of every retailer’s mindset,” says Ananda Chakravarty, an IDC retail analyst.

Types of gamification programs

Over the years, retailers have tried numerous gamification programs, but most tend to fall into a few basic categories, including:

1. Points and rewards: Customers accumulate points or virtual badges and earn prizes for actions like making a purchase, writing a review, or sharing feedback about brands and products on social media.
2. Contests and competitions: Retailers host challenges such as photo contests, trivia quizzes, or contests tied to television shows, movies, or actual board games.
3. Loyalty programs: Brands establish prize levels based on a customer’s purchasing history. The more they buy, the higher the reward. Airlines, grocers, and coffee shops use this tactic heavily.
4. NFTs: Some retailers are experimenting with introducing non-fungible tokens (NFTs) into elements of games and as prizes or rewards. NFTs are one-of-a kind digital collectibles like artwork, music, memes, trading cards, and video game wealth.

NFT loyalty programs: A new twist on customer engagement

Retailers are using NFT loyalty programs to engage new customers and reward current ones – learn the benefits.

The rewards for retailers

So, why go to the trouble of gamifying? Because as marketers who are fond of such promotions know, the benefits can be amazing:

• Better customer engagement: Studies show consumers love it when retailers ask if they’re up for a challenge. In fact, one report found gaming activities can increase customer engagement by up to 47% while another found they’ve improved customer engagement and loyalty by 30% for brands such as Walgreens, eBay, Threadless.
• Brand awareness: Sponsoring games as part of promotions or loyalty programs can go boost brand awareness in a crowded retail market. The mattress company Casper, for instance, famously captured consumer attention in 2019 when it placed ads in the New York subway with sleep-themed puzzles for commuters to solve as they rode the lines.
• Customer data: With Google set to remove third-party cookies from its search engine, marketers will have to find other ways to learn about customers. With gamification, consumers opt-in to sharing private information in order to play. In turn, brands can then use that first-party data to continue delivering custom messages and offers to customers.

That captured data is extremely valuable for organizations, IDC’s Chakravarty says. Not only can they use it for their own marketing purposes, but they can even sell some of it for profit. As such, he predicts this collected data will be worth billions of dollars.

Retail gamification examples

Most major retailers use gamification in one way or another, but there are a few brands that rise to the top with their innovative programs, including:

• Sephora: The beauty brand’s “Swipe it. Shop it” campaign borrows from apps like Tinder by allowing customers to swipe left or right to rate how they feel about products. Their “Beauty Insider Challenges” program, meanwhile, awards redeemable points as customers complete a variety of activities.
• Gucci: Rather than bring games to their sites, the European fashion brand and other retailers are reportedly injecting their limited edition capsule collections into actual video games. Gamers can participate in online fashion shows. The strategy, which utilizes avatars and NFTs, is meant to appeal to a younger, digitally savvy customer demographic.
• Starbuck’s: No discussion of retail gamification is complete without mentioning Starbucks. Their star-based reward system encourages coffee drinkers to sip more to earn future free beverages and food items. The program has reportedly led to an admirable customer retention rate of 44%.

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AI, augmented reality, and new possibilities 

Analysts say retail gamification could find even more momentum with automated technology like generative artificial intelligence.

In particular, Chakravarty says it’s possible generative AI will open the door to all sorts of possibilities. For example, it could help marketers imagine a vast array of new and compelling gamification programs to entice users. It could also help teams create gamified experiences aligned more closely to customer preferences, based on data.

Aside from gen AI, Ornella Urso, an IDC research manager, says we could see greater use of augmented reality and other technologies as part of Web 3.0, metaverse or other immersive environments where consumers could interact with brands in digital “rooms.”

Such innovation should keep gamification relevant for years to come, analysts say.