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?
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.
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:
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
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.
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!
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