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Some supermarkets drop loyalty cards

Five major grocery chains now offer the same prices to all shoppers -- forgoing their opportunity to collect data on customers' spending habits. Is this the wave of the future?

By Donna_Freedman Aug 26, 2013 9:46AM

Logo: Female shop assistant serving customers (Andersen Ross/Digital Vision/Getty Images)Shoppers at Albertsons, Shaw's, Star Market, Acme and Jewel-Osco no longer have to use club cards to get the best prices on groceries. Those stores, all owned by a company called AB Acquisitions, did away with loyalty programs earlier this summer.

The markets promoted this as a win for consumers: Now everyone can get sale prices without having to scan a card!

 

This strategy caused quite a buzz in the grocery industry. The prevailing opinion? It's a risky move.

So don't expect other supermarkets to ditch their loyalty cards any time soon. Such programs are the easiest way to collect consumer data for marketing purposes.

Grocery loyalty memberships have decreased by about 1% since 2010, which doesn't sound like much. But given how many people shop for groceries, any drop is significant.

Why the change?  

"Many consumers have grown sick of having to fumble to find a loyalty card at the grocery store," says Brad Tuttle of Time magazine.

In addition, some consumers consider the recording and categorizing of their transactions to be an invasion of privacy. Before signing up for a card it's a good idea to read the store's policy on whether and with whom such information will be shared and/or sold.

Big Grocery is watching?

Rewards-program experts say shopping data tends to be guarded. Michael Gatti of the Retail Advertising and Marketing Association told the SmartMoney blog that retailers are "extremely proprietary of that information."

 

But not completely. In 2011 the Centers for Disease Control used loyalty-card information to track down the origin of E. coli and salmonella outbreaks in the eastern United States.

"Officials (determined) where the contaminated foods had been purchased by accessing supermarket loyalty club records," reports the GoBankingRates.com personal finance site.

Thus it's not a stretch to wonder whether your shopping habits could be used against you, e.g., a custody battle that accuses you of feeding too many chips and sodas to your child.

Think that sounds paranoid? Back in 2004, a firefighter from Washington state was accused of trying to torch his own home. A key piece of preliminary evidence was his purchase of a fire starter, confirmed by his Safeway club card account. But he wasn't guilty -- someone else confessed to the crime.

What's in it for us?

According to the 2013 Colloquy Loyalty Census, a white paper about U.S. loyalty programs, some customers don't think that saving 50 cents on a can of beans is a fair trade for personal data.

If retailers aren't "crystal-clear in providing benefit to the customer in exchange for that information," and aren't transparent about their privacy policies, some consumers will refuse to participate, study authors say.

Plenty of us don't worry about transactions being recorded. We just flash those loyalty cards to get the lowest prices. Or maybe even a special deal: The Safeway and Kroger grocery chains offer personalized prices based on shopping data that's collected via loyalty cards.

Individualized deals are the wave of the future, experts say. Safeway CEO Steve Burd has even been quoted as saying that shelf pricing could become "irrelevant because we can be so personalized," i.e., offering different deals to different consumers.

"Such a concept may strike some shoppers as being inherently unfair," Tuttle says. Yet many customers will like individually tailored prices, "because it'll make them feel special -- like they're getting a unique deal created just for them."

How deep is your data?

Loyalty-program opponents like to point out that specialty retailers like Whole Foods and Trader Joe's and no-frills chains like Aldi's and WinCo don't collect data on their customers.

According to David Orgel of Supermarket News, the first group tends to "connect with shoppers in other ways" and the second focuses on delivering bottom-dollar prices every day versus running club-card specials. Both approaches build loyalty.

It's possible that AB Acquisitions stores will be able to flourish without cards. But it will require "spot-on execution to win against competitors with deep data and personalized offers," Orgel says.

"It's hard to underplay the challenge, as the competition will presumably get more intense over time as data capabilities improve."

Industry experts say it will take time for the new strategy to prove either brilliant or foolhardy. In the meantime, patrons of the five supermarkets will find their wallets or keychains a little bit lighter.

Readers
: Do you use a supermarket loyalty card? Why or why not?

More on MSN Money:

32Comments
Aug 26, 2013 11:18PM
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Bravo, I've always complained that I shouldn't have to carry a card to be called a "value customer".  Besides, considering what's going on this country.  It won't be long before your grocery buying habits gathered from your card are sold to your health care provider or insurance company to see whether you're buying "healthy"...call me paranoid

Aug 26, 2013 7:38PM
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I hate being tracked, so when i see a card, i pick it up and use it for my loyalty card, that way they don't know it's me. I also pay cash for liquor and cigars, so as to not be tracked. I like the discounts and need them, but I don't like the tracking thing.
Aug 29, 2013 7:55AM
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Loyalaty cards are a pain in the **** and it lets them invaid our privacy. Thanks to this article I am going to throw my cards in the trash.
Aug 29, 2013 9:07AM
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I'm glad those stores did away with their loyalty cards.  In the past, stores got by without just fine without those cards.  I hope the rest do the same thing as I resent them selling my info.  It's bad enough that any time I look up something on the net, I begin getting emails on just that subject, so I know everything I do online is being watched by someone.  I have nothing to hide, but I resent the invasion of privacy all the same.  My thanks to those stores for ending their cards.
Aug 27, 2013 3:47AM
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The single place I still have/use a loyalty card (safeway) would really put me in the dog house for something like medical provider and/or insurance.  I tend to buy ALL my fruits, veg and salad stuff (I do eat 5+ servings a day) at independent or specialty fruit/veg markets that do NOT have such a program.
Aug 29, 2013 10:37AM
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I'm a white guy.. After I swipe my card...I am known as Pablo Escobar

Aug 29, 2013 12:57PM
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I remember a time when there was no plastic cards. I was 16yo and working at A&P after school. After spending 24 years in retail grocery I've come to the conclusion the cards are a pain and don't really mean much. If you shop in several different stores they want you to have one for each, you could have a stack an inch high to tote around. If you forget your card they'll often scan a fill in card. Why not just put the best price on your product and make it for all without some consumer tracking card. Cause thats really what your giving up is your spending habits to a database for a pretend discount.
Aug 29, 2013 12:34PM
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I HATE those damn cards. A woman can carry them in her purse but a man carries them in his wallet & that means you sit a couple of inches higher on the side you carry your wallet on.

Of course I don't carry the cards but I have changed telephone numbers a couple of times & my area code was changed as well so I have to try several numbers to get the right one.

All those things do is slow down the check-out line. That costs the stores money & the customers time.

 

Aug 29, 2013 9:23AM
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my store loyalty cards do NOT have my info on them.  now, my dog's name, etc? yep, that's what i use, along with a PO box address.
Aug 29, 2013 3:23PM
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Give me discounts - I don't care if they know I buy ice cream !!!!!
Aug 29, 2013 1:20PM
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The only thing that I really like about my card is that is gets me a gas discount, depending on how much I spend on groceries....I have saved up to 50-70 (I think ) cents a gallon on occasion. If stores put items on sale they should be on sale for all, IMO.
Aug 29, 2013 1:23PM
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Big brother has gone way too far already!
Aug 29, 2013 5:20PM
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Valued customers are seldom that. if we were wouldn't our mail be addressed personally instead of to "Dear Valued Customer"?
Aug 29, 2013 3:56AM
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I have a loyalty card. However it is not tied to my name address or phone number. a clerk at the store I shop at gave me the card without filling out any application form. When I go into the store I also use cash. So I get the benefits of card membership but no tracking tied to personal info.
Aug 29, 2013 2:56PM
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Data mining aside, I don't mind my shopping items being tracked, just in case of a product recall. It would be nice to know some item I bought might give me salmonella
Aug 29, 2013 4:22PM
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No.  One, it is an invasion of privacy. Two, advertised prices in newspapers, sale circulars, etc., should, legally, be available to everyone.  Restricting the prices to those who allow themselves to be backmailed is coercive and criminal. Three, my experience is that the stores are liars - every one of them that I have encountered has claimed that they don't keep your data, at least not by name.  Then how can they personalize your "shopping experience"?  Notice the quote above that they "tend" not to share than information.  That is the use of what is called a "weasel" word or phrase.  Differential pricing is really scary.  Minorities and the poor have noticed for years that they are frequently charged more for the same goods and services.  You can check that out for yourself by comparison shopping.  You will find that it is frequently true.  You won't find many WalMarts in downtown Detroit.  The NSA could take lessons from the marketing industry when it comes to developing indepth profiles on citizens.  We need some uniform national legislation to control these folks but that is unlikely to happen so long as they keep the donations in cash and/or kind (voter profiles) rolling in.
Aug 29, 2013 11:05PM
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Who really gives a rat's rectum, if they want to keep track of my buying habits then they know I prefer orange juice to grapefruit and buy mayo but not mustard.

In exchange for allowing them to do this I get discounts that save me a few bucks. OK by me!

Aug 29, 2013 8:58PM
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I use cards at Safeway and Kroger. I'm not worried about data profiling since I've had discounts as high as 92% on a market basket through careful planning. I plan many of my week's purchases around the personalized discounts. Why pay more/
Aug 30, 2013 11:08AM
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The only thing that loyalty card says to the company about me is that I am cheap!
I scour the ADs every week, save coupons and only buy those things I can get with the
deepest discounts and yes I buy in bulk. Like last week got 10 large bottles of name brand shampoo for $3.18!  I happen to live in an area where I can make this 5 mile circle on Sunday to stop at 6 stores only buying the items we need and use often on steep discounts. For meat and veggies I shop at small local markets and scoop up there deals, The veggie stand has a 1/2 price area for ugly stuff...the butcher sells meats that aren't premium cuts or wrongly cut at a discount, I also get better prices per pound from him if I ask for something that isn't already cut up, I take it home and do it myself. My husband knows to wait for the call about 2 hours after I leave, the car will be full and I'll need help dragging it all in...I will spend about $150.00 for 6 weeks worth of goods. One day a week and a little planning can save you a boat load
Aug 30, 2013 2:12AM
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I just went into an albertsons the other day.  I could not believe how expensive they were.  At least with the loyalty cards, their prices matched other lower price stores.
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