Customers buy from you for a range of different reasons based on their perceptions and the relative value that they place on: price, relationship, product/service, expertise and trust. There are usually a few emotional factors in there too!
The mix and importance of all these factors varies by product, circumstance, time and immediate economic environment. Of course it can also vary by individual customer too. This means that there are a lot of variables and illustrates that there are no easy answers. Success is usually based around really understanding your customers and providing an appropriate mix of the variables under your control for your target market. If a strong competitor enters your market the worse thing to do is nothing. Hoping that customer loyalty will see you through is very dangerous. You have to understand the competitor, their offering and the likely impact that it will have on your current and target customers. Only then can you decide the most effective actions to take.
I advise my clients not to think about customers being “loyal” to them. Customers are simply preferring to buy from them until they do something wrong or a competitor becomes a more attractive option.
Only dogs are loyal, customers are not.