A supermarket might like to think of a loyalty card as something akin to a wedding ring. A symbol that you, the shopper, are betrothed to them, for richer or for poorer. They no longer want you to consort with a string of suitors. They want you to take a solemn pledge of loyalty and settle down with them for a lifetime of grocery-shopping bliss.
That's what your supermarket wants from you; an oath of undying commitment, a renunciation of all other supermarkets and some valuable information on the side… in return for 4 cents off your fuel bill or the promise of a holiday or a discount.
Is your loyalty really worth it? Or are you better off playing the field?
Capturing stray shoppers
As grocery shoppers, we're a remarkably fickle lot. Statistics suggest that only 10% of us shop exclusively at one supermarket. The vast majority of us are guided by our wallets rather than our hearts. Most of us will shop where the discounts are, and a weekly grocery shop might involve visits to two or three supermarkets.
The response to this scatter-gun shopping approach is the supermarket loyalty card, designed to engender just that. Loyalty. Major supermarket chains, such as Coles and Woolworths, have invested a great amount of thought and money into their loyalty schemes as they strive to capture stray shoppers, and keep them in one store.
Woolworths Everyday Rewards and Coles Flybuys and my5 loyalty programmes have been beefed up recently in an even bolder attempt to not only attract customers, but to keep them.
Everyday Rewards now offers discounts of up to 40% on a wide range of items, with no minimum spend. Coles Flybuys card is well known while their my5 programme offers, for a limited time, a 10% discount on five selected items, with a minimum spend of $50.
Smaller players are also in on the loyalty game. For example, Franklins Loyalty Club offers one point for every dollar spent, which can start to be redeemed once 500 points have been accrued.
It all started with coffee shops, DVD stores and the like offering your "tenth one free" as a way to increase custom and treat you to a direct benefit (and even a mechanism for spreading highly localised word of mouth) but supermarkets have turned this up to 11. Instead of a $4.00 cappuccino coming your way every second Friday, a fabulous holiday awaits….at some point…in the future… if you just buy… one… more... whatever.
With these rewards on offer, supermarkets like Coles and Woolworths hope that you, the shopper, will return the favour by sticking with them and paying for full priced items instead of purchasing a discounted product elsewhere. Call it 'blinded by loyalty' if you like, where the incentives and rewards on offer in one supermarket are enough to make you turn a blind eye to a lower price in another supermarket.
By creating a sense of loyalty through their reward schemes, supermarkets also believe you will shop with them exclusively as much through habit than anything else. A habitual customer is a 'rusted on’ customer, and that's the sort of shopper a supermarket loves.
No wonder they're so keen to commit!
So, when all is added up, is your loyalty truly rewarded? In a recent article in the Sydney Morning Herald, a spokeswoman for consumer organisation Choice was quoted as saying that the average, but loyal, Coles shopper would save approximatly $3.84 a week as a result of signing up for their loyalty programme.
Whether that is enough for a consumer to devote themselves to just one supermarket for any length of time is debatable. So is the idea of buying a more expensive item simply to gain a few points or a discount somewhere down the track.
At the end of the day, loyalty programmes might not be the great money-savers they're sold as. There's still a place for old-fashioned money saving practises, such as comparing prices from store to store. Shopping at a low-cost supermarket without a loyalty programme, such as Aldi, or at a Farmers Market is another basic way to save, as is the use of unit pricing and the judicious use of specials.
More: Supermarket special guide
In the long run, shopping for what you need instead of shopping for the sake of being rewarded is a good idea. But logic often flies out the window when rewards ranging from discounted petrol to shopping vouchers are on offer.
But hey, love makes us do crazy things!
Getting to know you
While debate continues on the relative merits of loyalty cards, and the benefits to the average shopper, another major factor in their appeal to supermarket chains is largely overlooked.
A loyalty card gives the supermarket a far better idea of your shopping habits, thanks to the personal information you provide when you sign up for such a programme and of course, what they can determine from your boxes of nappies or microwavable dinners for one.
Armed with this knowledge, the supermarket can market their products to match your shopping preferences. Not so long ago, supermarkets could keep track of what was sold in only a very general sense. They knew what was being sold, but not necessarily who was doing the buying.
The advent of loyalty cards, and the information you provide when you register for one, means the supermarket can keep track of your individual purchases, which allows them to map a personal shopping pattern over time. As the pattern becomes clear, the supermarket can target you directly, promoting products that you're in the market for. It's as if they know you. That's because they do. After all, you're in a committed relationship!
It could therefore be argued that this detailed information, rather than the hope of creating customer loyalty, is the biggest benefit that supermarkets derive from their frequent shopper programmes.
So, is your loyalty rewarded when you join such a programme?
Every shopper is different, and every supermarket knows this, thanks to the personal information they receive when shoppers sign up for their loyalty cards, and again when those cards are scanned at the checkout.
Savvy shopping, is savvy shopping, loyalty card or not. But for someone else, that same card could see them make purchases they can ill afford, simply to collect points. Like most things in your financial life, it comes down to how well you manage your money.
While an overall picture of their monetary worth is a little unclear, Choice's evaluation found that most of these programs provide less than a dollar of savings, for every hundred spent. The prudent shopper simply needs to balance this modest saving against the loss of privacy and 'forgone' savings in other establishments.
What is clear, is that supermarkets will continue to woo you with promises of rich rewards, in the hope you'll finally say 'I do' to a loyalty card.
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