CVS extra care and similar discount cards

I would just like to know how companies like CVS and supermarkets, etc. make money off of those cards that give you “discounts” just for filling out a piece of paper in 30 sec’s, basically just filling out a simple marketing survey? And then do they raise the price on everyone else?

They don’t. At least not directly. But the marketing info provided helps them to increase profits in the long run, by helping to guide their advertising targeting and product merchandising.

They also have an address to direct mail you. On the whole I think its a good deal for me, I get things slightly cheaper and they find out what kinds of things I do buy and they send me mailings that I normally trash.

These are not good for you. You are in no way shape or form getting a discount. They are merely screwing over the people who prefer their privacy (and have finite wallets).

This is one of the classic examples of extreme gullibility of US consumers.

Don’t ever get one. Don’t go to stores that “require” them, etc.

What these people do with the information is scary (even if you think you’re tricking them with fake info, pay once with a credit card and they got you).

Do they really expect all US consumers to carry around 400 discount store cards? Even Green Stamps were a saner idea than this.

That’s much too broad of a statement, ftg.

First of all, how is it an example of “extreme gullibility”? Are stores getting your info deceptively? Of course not - you fill out a form at most stores (some stores don’t even require information - they just give you a card).

Second of all, what “scary” things do they do with the information that you willingly provide? Mail you stuff? Kind of a loose definition of “scary” you have working there. So you get mailed flyers. Big whoop.

Third of all, people who “prefer their privacy” shouldn’t be filling out forms that list their name, address, and telephone number. That’s their fault, not the fault of the store.

Your example actually makes his point. If they hand out cards for the asking, then the stores obviously consider the so-called ‘discounted price’ their real price, and the discount itself is a fabrication. No one is saving money compared to what they’d be charging without the cards, but some people are paying more.

Grocery stores are very competitive. Profits across the “general grocery” industry (as opposed to specialty) run around 3% – less than any other retail sector. Individual stores rarely exceed 5%. Aby store that tells you they’re giving you a 10% or larger discount across the board or on average (a claim I’ve seen more than once when a chain moves to the card system) is simply lying.

Despite (or perhaps because of) the narrow net margins, stores don’t hesitate to gouge when they can. Supermarkets in poor urban neighborhoods (where chains are very sparse and fewer customers have cars) charge far more. If you ask, they might claim that there is more pilferage or whatever (they used to make this claim, but it has been debunked often, and I don’t know how many stores currently make it). However, it is an established industry rule that such stores make more money per dollar of sales than stores in he suburbs, where many competitors are always just a few minutes drive away. They even admit it in their trade journals, saying that that even if their profit margins are 60% more, poor people can afford nearly as much as affluent people, so suburban stores generate larger total profits on far larger gross sales. It’s not that the urban stores aren’t aren’t making money -they make more money per dollar of product; but larger suburban stores, with more display space and product lines are seen as more desirable from the corporate perspective for quite a few reasons, including operations, finance and stock prices.

The card is a lie, through and through. There is no discount involved, just enough chiselling of the uncarded to make the lie plausible. In most stores, after the initial sign-up drive, the cashiers are given a card to use to ring up for people who ‘forgot their card’, at their discretion. After a year or two, even that pretense is dropped, and I’m often rung up on the cashier’s card before I even get a chance to pull out my own (In my area, the stores without cards are cheaper than stores with cards, with equal quality for most items, so my primary grocery shopping is uncarded. I do have cards for the stores that use them - they won’t derive any usable information from my less-than-monthly convenience or emergency visits)

The cards are a civilized form of extortion, that imply that you need to fill out the form and give information they would otherwise not be entitled to (and people do, sheep-like, by the tens of millions) for a ‘discount’, but in the end, you get the same price you’d have gotten if cards weren’t used. My proof? Consider this: well over 95% of all customers get the discounted price, whether through their cards or the cashier’s card (according to industry numbers). How do you think their marketing would fly if they told the truth: “We reserve the right charge 10-20% more if you don’t hand over your personal info”?

In most states that would actually be illegal.

As to the uses that information can be put to, well, I can only suggest you research it yourself. You wouldn’t believe me.

Why do they even have a space for the Social Security number on your discount card? (many stores claim it’s required, but if you resist, they will tell you to fill in all zeros or a fake number, knowing they can probably track the credit cards anyway) Do they have any legitimate need for this information, which is widely used as a private identifier for your most sensitive information? [It shouldn’t be, and the practice is hugely criticized in the security industry, but it is so easy that corporations continue to use it]

You say it’s the customer’s fault for succumbing to this coercion? I suppose the victin is at fault for blackmail and extortion!

The gullibility ftg is speaking about is those customers who believe that they are actually getting lower prices at stores with loyalty cards. Cite

When these stores institute cards, they have to pay millions for the computers and overhead to support them, and that means raising all prices to cover those costs. Stores without cards have lower prices. And they aren’t spying into your life.

That’s the scary thing they can (and do) do: keep a record of everything you buy. Which is none of their damn business. They can and will use it to target you for advertising (if you gave them your real identity and address). But they also use it to structure their stores to serve their most profitable customers, which can leave the less profitable majority worse off than before. (See the section on “Segmentation of Consumers” on the page cited above.) And ultimately they could use it to charge less profitable customers higher prices.

Here’s a charming little story that I believe I heard on the same site. Shortly after 9/11, mid-level employees at some grocery chain with a loyalty card program turned over to the government, without being asked, without receiving anyone’s permission, all the purchase records of all of their customers, in the hope it might help catch the terrorists.

The stores say they have privacy policies that prevent disclosing of personally identifiable information, but there’s no law requiring this or specifying the level of privacy citizens can expect. And once the information has been collected, it will inevitably be misused and abused.

Loyalty cards are just another step in the encroaching loss of privacy in our society. My only response, since all the grocery stores near me use them, is to use the card, but not provide my real name and address. But this is only a stopgap measure. The stores could, if they wanted, not allow this. And this tactic is a pain in the butt, because I always have to pay in cash, to prevent them getting my identity from the credit card or debit card.

People have to stop letting companies and the government pry into every aspect of their lives.

I see on preview that KP has provided a very good critique of the loyalty plans that somewhat overlaps my post. Well done, KP.

Yep, a lot of it is for customer segmentation - I do it at work every day. When I’m doing advertising work for retailers, this is usually the sales information they provide to us - however, we don’t get it at a record-by-record level. They usually just wrap everything up to the ZIP Code level and that is how we determine the best areas to advertise. More sales = more customers = more advertising.

It’s a lot easier for most retailers than to have their annoying cashiers ask everyone’s phone number or ZIP Code (only to have 60% of national sales end up in 90210 or 12345).

What about Wholesale Clubs… Sam’s Club/Bj’s/Costco ETC. It would seem to me that these places that have ‘savings’ consumers can see and measure themselves already have all the information of a loyalty card and then some (Picture on most Sam’s Club cards). Sam’s (The only Club Store I shop at, so the only one I can speak to) would not allow ‘public’ membership if it was not profitable.

Are Warehouse stores the father to Loyalty cards? How many tricks did the father teach his son? Will ‘regular’ stores soon charge a monthly fee to use their card?

If you can’t get the card price with out getting a card, what are you to do?

(The South-eastern US Supermarket Publix (www.publix.com) tried using a card once, and now bills it self as being a store that doesnt have them)

If you have been shopping for a couple of decades (or have a careful regular shooper among your family or friends), you can probably see one effect of market segmentation. “Prime shoppers” (the minority who generate the most profit for stores) tend to buy more fresh groceries, and prefer frozen vegetables to canned. Most shoppers buy more canned than fresh, but nonetheless most grocery stores are cutting dramatically on the shelf space and variety of the canned vegetables they carry (compared to 10 years ago) and increasing the display space for the much more expensive fresh foods. Frozen foods are impacted, too, but not as consistently. In most areas, the variety of frozen vegetables is increased, but the number of brands and space devoted to each variety is being decreasedm, but in other areas, prepared fozen foods are displacing frozen vegetables, resulting in less vegetable availability overall.

This effect often spills over to non-card stores, who often match the stocking policies of their local carded competitors as a ‘safety’ measure: food prefrences change, and can be strongly affected by the economy and other factors. A store that stays close to its competitors may miss opportunities, but is in less danger of being ‘caught out’ by a shift in the economy or customer preferences than a store which remains distinctive in its stocking policy.

This kind of herd mentality has long been seen many industries. It actually makes stores more vulnerable in the long run. Think of the biological world: decreased genetic or physical diversity between or within species decreases survival when circumstances change.

One good use of grocery-store discount cards is that they’re occasionally tied in to other programs. My student loan provider has an agreement with upromise, which is a program where a percentage of everything I purchase using my discount card is then turned over to PHEAA to pay down my student loans. Since it doesn’t cost me anything out of pocket, it’s worth it. Most of the grocery stores in my area use discount cards, so it’s not a big issue for me.

Robin

I used to go to the only chain store in my area that did not require the discount card. Now they also require one, so much for voting with my wallet :mad:

There are occasionally good deals on products I use anyway.

CVS gets to increase its store-brand sales, because the card discounts all CVS products 10%. All credit and check transactions become less risky for the store, because they know where to find you. They can send you targeted coupons for stuff you really buy, instead of scattershot couponing for what you don’t buy.

They know my name, address, age, and buying habits. In exchange, I get discounts on stuff I’d buy anyway, money-back certificates, and a hang-tag on my keys that’ll get them mailed back if I lose 'em. Yes, I’m giving away some privacy, but I don’t care who knows what I buy at the drugstore.

Okay, so why don’t you post your list of presriptions and how much Prozac, Rogaine, Viagra, and hair dye you buy, how many contraceptives you use in a month, etc. etc. etc.?

It might be hard to imagine finding something embarrassing or sensitive in a grocery shopping record (although I might not want my monthly consumption of Godiva Belgian Dark Chocolate ice cream disclosed), but at the drug store? There’s some sensitive info, IMHO!

People are unconcerned about this because they don’t see how it could be abused or misused, and maybe we opponents can’t point to a major smoking gun case (although that post-9/11 incident I referred to is pretty bad). I think one will be along eventually, and will change public attitudes. Or I hope so. But then it may be too late.

But I start from the other side and say, why should I let them have this information? It’s none of their damn business! They have no right to collect it and I’m not going to be bribed into making it easy for them to spy on me.

BTW, it’s not like I have any deep, dark secrets to hide. The most embarrassing thing about my life is how boring and uninteresting it would be to anyone who bothered to look. Prescriptions: none. Viagra: none. Condoms: none.

KP – since I’ve gotten married to an excellent cook, it seems that all we buy is fresh food. No canned or frozen anything except for pasta sauce and hot sauce and some ethnic things and certain chilis. Compared to what I used to spend on groceries just for myself (all the “bad,” canned and frozen stuff), groceries are cheap-cheap-cheap. The two of us easily spend less than I spent on myself. I really thought that (nutrition aside) this was the whole point of not buying packaged, processed foods.

Also, KP, I’d always “known” (took for common sense and oft-repeated folklore) that inner-city grocery stores were more expensive than the suburban ones we all love and know. I still think we’re right, but I have a notable exception (or maybe the “real” rule?): there are two major places we purchase groceries: one is a big, suburban chain local to Michigan/Ohio/Indiana (“Meijer”), that doesn’t have discount counts. The other is an ethnic supermarket in Mexicantown part of deep Detroit that has a frequent shopper card (which we have) that awards points for purchases of certain things (we have a heck of a lot of points, but really nothing to spend them on). I know for a fact that the prices on just about everything we buy is cheaper than at Meijer. The only things I can’t really compare are the things at the Mexican grocery that Meijer doesn’t carry or doesn’t carry reliably (serranos, fresh tortillas, and some other incidental things).

I have my cards in various made-up names (including one for each of my cats). Fake names, addresses, phone #'s everything. LOL. And I only pay cash, so no tracking me by credit card #. Plus I usually get several duplicate cards, and give these out to friends for a laugh.

Balthasar-

I happen to be a fair cook myself. To me, the preparation of a meal is part of the meal itself. I happen to find that fresh produce isn’t all that expensive, because, for some reason, I seem to use less and gain more satisfaction from the (probably healthier) results.

However, your practices and mine aren’t really relevant. My argument concerning the buying practice of most Americans, and the numbers -widely available- are most emphatic on this subject. Further, I didn’t sat that canned and frozen foods were more expensive. I said that the variety of offerings and shelf space were being cut. Today, one often finds well under a dozen vegetables (not counting varieties of beans) in the canned goods section - mixtures and different cuts aren’t really different vegetables.

This may not affect you or me much, but it affects those who can’t or won’t shop twice a week for fresh produce, or need to save time on prep. I have many patients who survive primarily on one grocery trip a month, driven to the store by a friend or relative. Heck, when I’m busy, I may go a couple of weeks between shopping trips myself.

As regards urban stores, I wasn’t going by a personal impression. Industry trade journals live to recite and explain the figures, trends and rationales to the industry itself. I’d’ link some, but they don’t seem to see any value (and probably see potential harm) in maintaining public web archives. Reading business practice journals of most “consumer level” sectors with a critical eye can yield real shockers. I’ll admit this applies to the 'business practice" (as opposed to the clinical medical) journals in my profession too.

Oh, I should have suggested this:

It’s not like these journals are high secrets. You can probably find some in a waiting area of your local major supermarket (where the reps and agents wait). Store managers are also more than happy to give you their old ones. I’ve always enjoyed reading journals of other fields, both business and technical. They’re fascinating!

They can also generate income by renting their lists to mail houses so that other businesses can send you junk mail. Working in marketing I used to see this all the time.

Example/ Say we are marketing a product to lawyers, we rent the list belonging to Lawyers Phoney Magazine Monthly. We had to pay big bucks to do it too, but it was easier than researching 8,000 names ourselves. We send our junk mail to their customers.

My former housemate filled out a few club cards (and store credit cards) differently each time. For one he wrote John M. Doe, another was John Middlename Doe, another J. M. Doe, etc. Within a couple months he started getting junk mail address to J.M. Doe. So he knew exactly which company had sold his info.

The drugstore has all of that sensitive information whether you have a card or not. It could be that Rite-Aid (which doesn’t have a card) is set up differently, but I can’t imagine having a card scanned while paying at the pharmacy counter. What would be the purpose- CVS doesn’t give discounts on prescriptions, do they?
Now onto supermarkets- Pathmark doesn’t seem to have increased prices or eliminated sales since introducing the card. What they have eliminated are the coupons that I would forget to clip or bring with me to the store. They have been replaced by the “club discounts”. I’ve given up some privacy, privacy that I don’t particularly care about and in return I don’t have to pay the non-coupon price becasue I forgot about the coupon.