You know the cards you can sign up for at the grocery store that make you eligible for discounts on certain items? I understand how they are advantageous for the customer, but what does the store get out of the deal? It’s not like you have to pay for those cards. It’s not like those cards forbid you from shopping elsewhere…or getting cards from other stores. But obviously they are effective for something, since so many stores use them.
I can only think of three, non-mutually exclusive hypotheses:
#1. Customers feel obligated to shop only at the store (or chain of stores) since the card will give them a break on stuff there that’s not discounted elsewhere. (But if the customer is smart, they’d get cards for multiple stores within their shopping area and keep track of the circulars, right?)
#2. If a store discounts items to everyone, they lose more money than if they discount items only for the ones smart enough to get a card. If the ones who don’t have cards outnumber the ones who do, then the loss from the discounts are minimal but they can still look like they’re giving people a break.
#3. They can fool people into thinking their $1.69 Lean Cuisine is marked down for everyone by having big signs with little print. Cardless people will find out differently when they get to the register, but will be too embarrassed to void the purchase.
Are my hypotheses sound? Which one is the best explanation?
dragongirl hit it. There are marketing firms that are very interested in what you buy.
Let’s say I am a life insurance company. I know that a hot market for life insurance sales is families with new children. How best to identify them than to identify who, exactly, is buying diapers? Before data mining, I could call Safeway, Wal-Mart, Delchamps, etc and maybe they could tell which stores were selling the most diapers, and I could blanket market the surrounding areas. But now I go to XYZ Data Company and say–gimme a list of diaper buyers. XYZ has a deal with Safeway: You give us this information, we will subsidize price breaks for people who have joined your club (given you their personal contact information). The store, in turn, realizes more sales as people are drawn to the good prices…and pick up some snackwells & beers while they’re shopping that they would not normally have made a special trip for.
In the end, this benefits the consumer as products and services they need, but don’t yet know they need, are target marketed directly to them without their even having to think about it.
I think all three of your hypotheses are good ones, Monstro, without any of them dominating the stores’ thinking.
It makes me think of something similar, however. I always get a chuckle when someone in government proposes that we solve the prescription drug price problem by giving everyone one of those prescription drug discount cards, as if there’s something magical about the card, something that will suddenly make pharmacies and drug manufacturers everywhere perfectly willing to settle for slimmer margins.
The thing that I find interesting is that they usually give me the discount anyway. They ask if I have a card, I say no, and they enter the store’s card number…
Creepy, ain’t it? I seem to recall, however, that when I got one of those cards at the store, no one was actually checking the information I gave them. No one demanded to see any identification, and when I make a purchase, I don’t believe the credit card I use has to match up with the shopping card.
If I’m right about this, the answer to our paranoia (justified or not - remember, just because you’re paranoid doesn’t mean there isn’t someone following you around) is to lie through our teeth when we get the card. Give them a phony name, or at least a nickname. Give them the address of the nearest massage parlor. Give them the phone number for the Naval Observatory Atomic Clock (202-762-1401).
For a data miner, missing data are a problem, but bad data are worse.
Maybe next you could forward me your e-mail address so that I can send you some amazing deals on Viagra or one of those electro-stimulation ab machines, or maybe you could use a bigger penis, no?
And you wouldn’t even have to spend the time and money requesting marketing information from these outstanding corporate citizens. Doesn’t that sound nice!
At out local Kroger chain, King Soopers, all you have to do is ask for a card application, lift the card and key-chain off of them, and throw away the application. Those data miners can proceed to fuck themselves with a value-sized tub of cranberry juice. And just to be clear, nobody is saving any money off of these things; they just jack up the prices ridiculously and then go on to mark them back down. According to my receipt, I saved 53% on my last set of groceries! :dubious:
How do the stores determine whether or not they’re going to do this nonsense? In my home town there aren’t any stores doing it yet, but where I go to school almost all of them do it.
Why hasn’t Walmart started doing this? There always so concerned with low prices, great deals, and putting the customer first, I would have expected them to have started up an operation like this by now.
As for the “Won’t they lose money?” angle… I remember when they introduced the “Discount Cards” at the grocery store near my old house in Nashville.
Before Card: Can of Peas: 89 cents.
During Introduction: Can of Peas: 99 cents.
After Card: Can of Peas: 99 cents, 10 CENTS OFF WITH DISCOUNT CARD!!!
I suppose there are legitimate savings here and there that are only available with the card, but for the most part, you’re using the card to get the same prices you paid before.
In the interest of discouraging the spy network… anyone feel like starting up a SDMB club card exchange?
Why hasn’t Walmart started doing this?
Maybe they don’t feel it would actually profit them.
Maybe they worry it would annoy their customers, or that they would wind up paying extra wages to the staff who would have to hand the cards out to people at the customer service desk.
Perhaps Sam Walton (and now his family) simply think/thought it’s dumb.
Part of me remarks that Walmart in many regions DOESN’T HAVE TO WORRY that you’ll go elsewhere. For many products, in many places, Walmart is the only viable and cost-effective option.
Grocery stores have fierce competition in many places. I don’t want to get into GD territory, but insofar as the market for non-grocery items goes, it is arguable as to whether or not Wal-Mart actually HAS competitors.
Everywhere I’ve ever lived, the Walmart superstores offer price-matching on grocery items (not sure about other items), so they match any advertised price at other area stores.
(However, they won’t match the “2 for $3” or “buy one get one free” sales. So other local grocery stores seem to run more of these now, to combat the Walmart price-matching.)
The above linked to AlterNet article is dead-on about what is going on.
Your personal information is worth $ to companies. So Kroger gets a lot of info on you and sells it to a lot of other companies. And keep in mind, that drug stores are doing this. I.e., the companies that fill your prescriptions. I.e., the information that can be deduced about what diseases you are being treated for. Isn’t that a warm, comforting thought?
While there are rules about what medical information can be released to other companies, the drug stores worm around them (or all too frequently just ignore them). So a couple of years ago, a Florida drug store chain sold to a drug company a complete list of all the customers who had received anti-depressants. The customers then got marketing crap for the drug company’s brand of anti-depressant.
And of course, when they were caught, it was a giant “no harm-no foul” love-in and nobody went to jail or anything. Afterall, you don’t want to prevent companies from making $ do you?
One thing stores do to discourage people from not providing accurate application information is the addition of extra savings sent via mail. If you don’t provide your name and address you won’t get special discount coupons. So, amazingly, a lot of people actually toss their personal privacy away for a few pennies!
Note that in the case of drug stores, the pharmacies have to have your actual name and address so you’re screwed there no matter what.
There is a simple solution to the grocery store card mess. No one ever gets or uses such cards. They will go away overnight. (I.e., we’re stuck with them forever. The rules of Commerce are dictated by the dumbest among us.)