Supplier funded loyalty: the untapped revenue opportunity

Retail media is booming.

In 2024, UK retail media ad spend reached £1.4 billion. By 2028, it’s expected to pass £7 billion.

Most of the attention goes to banners, shelf-edge promotions, and in-app ads. But some of the most powerful activity is happening inside loyalty programmes – away from the spotlight.

Welcome to supplier funded loyalty.

This isn’t just about rewarding customers. It’s about unlocking value from suppliers, using your customer data more effectively, and turning your loyalty platform into a media channel in its own right.

What is supplier funded loyalty?

Think of it as the evolution of traditional loyalty schemes. Instead of retailers bearing the full cost of customer rewards, suppliers fund targeted offers to specific customer segments.

The emphasis is on ‘targeted’. Supplier funded loyalty isn’t blanket discounts sent to a retailer’s entire customer base. It’s personalised, based on the customer and product data owned by retailers.

Better still, supplier funded loyalty isn’t just for supermarkets. Any retailer with a supplier ecosystem and rich customer data can capitalise on this opportunity, such as fashion retailers stocking multiple clothing brands.

The difference between supplier funded loyalty and retail media.

Retail media focuses on broader, above-the-line advertising, whilst supplier funded loyalty operates below the line. It’s discreet, targeted and measurable.

So how does it work?

1. Brands fund exclusive offers for the customers you (as the retailer) know best.
2. You provide the access and the insight.
3. Brands provide the budget.
4. Customers receive offers that’re more personal and valuable.

This isn’t just reach. It’s real relationships in action.

What does ‘good’ look like?

Retailers running supplier funded loyalty programmes are already seeing results. For some retailers, supplier contributions help cover the cost of the loyalty programme entirely.

Many brands come back year after year. Some drop out, then return once they realise competitors are gaining share. Think of it this way – if Coca Cola opts out of supplier funded loyalty whilst Pepsi participates, who’s getting preferential access to soft drinks customers? Pepsi. This level of competition means suppliers can’t afford not to take part.

Let’s consider some real-world examples.

Tesco Clubcard Prices show supplier funded loyalty in action. Brands fund discounts aimed at specific customer groups, delivered through loyalty data. So those personalised offers you see aren’t Tesco being generous – they’re funded by suppliers looking to reach the right customers at the right moment. Boots, Sainsbury’s, and Co-op have launched similar initiatives.

These programmes are now moving beyond blanket offers toward more personalised, measurable experiences.

This isn’t an emerging trend. It’s fast becoming the industry standard.

What retailers need to succeed.

To make supplier funded loyalty work at scale, you need:

• High-quality customer data
• Effective audience segmentation
• Tools that let suppliers launch, manage, and track their campaigns
• Robust measurement to prove ROI and show incrementality

With the right setup, loyalty becomes a profitable, scalable media channel. Without it, the process can become slow, manual, and hard to maintain.

Why suppliers buy in.

Brands aren’t just chasing impressions. They want action.

By investing in your loyalty programme, they can:

• Convert customers from competitor brands
• Cross sell to shoppers who aren’t currently buying their products
• Access customer insights to identify growth opportunities e.g. are they underserving any customer segments?
• Innovate new products to increase market share

Supplier funded loyalty brings performance and precision – not just awareness.

Changing the loyalty conversation.

Supplier funding is changing how loyalty is viewed internally.

It’s no longer a pure cost centre. Instead, it becomes a revenue stream supported by partner brands. It’s a triple win:

1. Retailers get a more sustainable loyalty model that generates incremental revenue
2. Suppliers get detailed insight into customers for stronger, more effective marketing campaigns
3. Customers get personalised offers that keep them coming back

Looking ahead.

Supplier funded loyalty is becoming a key layer of loyalty.

It’s providing retailers with new income; giving suppliers better results, and delivering more relevant experiences to customers.

This is why investing in loyalty counts – and you don’t have to fund it alone.