The Drivers of Customer Loyalty in Finland’s Fashion Retail Industry

Abstract

The fashion retail industry of Finland is a competitive market characterized by a mix of evolving consumer preferences, increasing sustainability demands, and the impact of digital technologies. Building and maintaining customer loyalty in this competitive landscape is crucial as not only does it retain customers, but also ensures repeat business and sustains market position. The aim of this research is to investigate and identify the drivers of customer loyalty in the Finnish fashion retail industry. The research further explores loyalty programs and their impact on customer loyalty in the fashion retail market. The research questions answered includes what the relationship is between customers loyalty and its drivers and whether loyalty programs are a significant driver of loyalty in the industry. Theories from different literatures covers the concepts of customer loyalty, types and phases of loyalty, loyalty programs and the Finnish fashion retail industry. A conceptual framework is developed with six (6) proposed hypotheses of potential loyalty drivers namely, customer satisfaction, trust, brand image, perceived value, product and service quality and loyalty programs. A quantitative research method is implemented in the form of online survey via Google Forms together with a snowball sampling technique. Out of the six (6) hypothesized drivers, the research results reveal customer satisfaction, trust, brand image, perceived value, product and service quality as the drivers of customer loyalty in the fashion retail industry of Finland, but with only customer satisfaction, perceived value and, product and service quality being the most influential drivers. The results also show a positive relationship between the drivers and customer loyalty. Loyalty programs turn out as an indirect driver as majority of the responses were neutral.