The secret weapon of the big supermarkets

As the supermarket price war escalates, who is better off, the consumer or the supermarket? The answer may surprise you.
Image: © Gina Sanders - Fotolia.com

As Coles and Woolworths continue their price war against one another, we as consumers sway our loyalty between whichever stores can offer us the best value for our weekly shop.

To try and convince us to pick one or the other, each supermarket is reducing the cost of items to try and buy our love and attention. A true case of buying ones affection like the long lost relative who wants back into the family.

Though as the price war escalates, who is better off, the consumer or the supermarket? Some will say the consumer due to the reduced prices; however the true winner is the big supermarkets and let me tell you why.

Your personal data is an untapped goldmine

Have you noticed how nearly all supermarkets have a loyalty rewards program in place? Loyalty programs are a great way to reward just that, loyal customers. These loyalty cards are also quickly becoming required to obtain the vast variety of discounts on offer from the major supermarkets.

These programs are also great ways to track purchases, demographics, sales data and other valuable pieces of analytics around consumer behavior.

The data that these cards provide is invaluable. It opens up access to the demographics behind the main grocery buyer – whether it be gender, age, location, products purchased or a mixture of all. This kind of data goes a long way in helping supermarkets understand and segment their consumer database. It allows them to target advertising both now and into the future in a more direct and precise way.

The more they know about you, the more angles they have to engage you.

How might the supermarkets use your shopping data?

Exactly how the data is used is unknown to the general consumer. Though if the data is analyzed like many other loyalty cards, the end result is simple; if they understand their customers better, they can find ways to both help them and sell to them in a more efficient way.

Potential uses might include:

  • Targeting specials directly to consumers that they know will have a high propensity to buy
  • Establish shopping patterns, both daily and seasonally of shoppers to promote certain items
  • Look to gain market research into who buys a certain product so the supermarket can ascertain if they should create a ‘home brand’ version of the product to further drive profits.
  • 1 to 1 marketing, enabling the supermarkets to target you, via online or offline with offers that will appeal to people like you or statistically similar to you.

Supermarkets are becoming much more than grocery stores

A key thing to remember also is that supermarkets are becoming much more than just grocery stores. They have branched out into many other retail sectors and their loyalty cards have also. For instance, a single loyalty card might be able to ‘reward’ you for shopping for groceries, alcohol, electronics, hardware and more. This gives the supermarkets a hell of a lot of data on you.

I have gone slightly off topic though, what I meant to say is that supermarkets are increasingly branching out into other fields that will benefit from the data they collect. For instance, a few of the major supermarkets are beginning to dabble in financial services. They offer credit cards, insurance and other financial products.

Through having a wealth of data on consumers pre-existing through their retail stores, the data can be layered over the top of their financial products and all of a sudden, your entire financial picture and spending patterns are being tracked and analysed.

I can just see waking up to check my supermarket credit card balance after a few too many wines. I login and there is an advertisement for a home brand of Panadol, tempting me with its glorious pain relief that it knows I so need after tracking my numerous purchases of wine the night before.

What might your loyalty data say about you?

So my question to you is this; what would your data say about you? Are you happy to think that although your data may be anonymous, your every move is still traceable when using a loyalty card? Leave a comment below with your thoughts.  

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Savings Guide Logo Alex Wilson is the founder and editor of Savings Guide, Australia’s number one saving money website. For regular money saving tips, visit Savings Guide or follow Savings Guide on Facebook.