The purpose of loyalty cards?

Inspired by this thread, I thought I’d ask about the hated loyalty cards that grocery stores use. Is the cost of gathering this information really worth it? How does, “I buy what is on sale.” help the store? My Kroger and CVS cards both have my old Ohio information on it, so they’re not learning where I live in Dallas. Plus, when I have had roommates in the past, I’ve often bought stuff for them. I’m sure the vast majority of people fill out all the information correctly for these cards and the demographic information must be valuable to the grocery chain or else these things would have died a quick death. What other purposes do they serve?

There’s a multitude of information that can be gathered from purchases alone that doesn’t need the geographic location of the purchaser. For example, if a good price is offered on an item, does it affect the sales of related products? And how much price reduction is necessary to get S sales over T time?

If you can keep track of 100% of the purchases of most store patrons over a long time, there is much data mining that can be done. The demographically-oriented mind boggles.

I don’t think those cards are hated as much as you suggest. All of my neighbors have them, and it doesn’t seem to bother them in the least. Personally, I feel that they jack up the prices for NON-card carriers, so count me among the haters.

But, I caution, 7 times out of 10, when there is a card-only price offered for a product, there is another, usually a house brand, that is cheaper on an everyday basis. You should never pick up something just because it is shown with a big red “price reduced” sticker. Look around and the “price reduced” item might be the most expensive one on the shelf. Mark my words.

It is also a form of advertisement for the store. You have to carry the card in your wallet, purse, or keychain so you are constantly exposed to their name. Also, there is a theory that you will be more “loyal” to that store once you have their card because you may not have a card for the competition and be less likley to shop with the competition on a whim.

Suckers. I’ve got cards for 4 stores in my town.

and the local Co-Op

The loyalty concept doesn’t work as well when the market is so limited. I have cards for all the supermarkets for a 40-mile radius, too. All both of them.

But I stopped going to one of them when they began carding 80-year olds for liquor purchases and linking the database to driver’s license numbers.

It would seem that a store could get this information without “loyalty” cards - juts by tracking items that are purchased.

You’re half right. But without linking simultaneous purchases by the same customer, you don’t know if one event led to the other. If lemons are reduced, and apple sales go up, did one cause the other? Can’t tell. But if most lemon purchasers also bought more apples but non-lemon purchasers did not, there might be a connection.

Without cards, you also can’t track purchases over time by the same customer. Example: On checkout, I get a coupon for product X. Did that coupon lead to a subsequent purchase of product X (on the next trip)? If so, the store might issue more of same. If not, try something else.

This has not been my experience, and I do actively compare prices. In my experience (Albertson’s), half of the carded items are store brand in the first place, and when a non-store brand is carded, it’s usually cheaper than the equivalent store brand product (if there is one). The only exception I’ve seen is pop: Name-brand pop goes on sale frequently, but it’s never as cheap as the regular price store brand. Even there, though, the store brand sometimes goes on a card sale for even cheaper than usual.

Chronos, YMMV, of course. My experience is only with Econo Foods and Pick-N-Save, the only two supermarkets near me. But for many years I avoided getting the cards because I was afraid it was too easy to grab the “cents off!” carded-item rather than looking more closely for the best price. Sometimes the savings for avoiding the specials can be dramatic.

And I was annoyed that the savings I actually received was never reflected in the paper tape. Instead, if I purchased a special item, the tape said, “You would have saved $.25 if you had a card!” which is totally bogus since it ignores the savings I got from avoiding some specials.

But now that you questioned it, I’ll make a list of 10 items at random at the store the next time I go and post the actual numbers. It should be educational for both of us.

I like the cards, and have them for most of the grocery stores in my area. I do “shop the ads,” so I don’t have any great loyalty to one particular store. I’ll go to whichever one has most of what I need on sale. Two observations from my experience:

Safeway actually sends an email every week (to my “commercial junk” address) titled YOUR FAVORITE ITEMS ON SALE AT SAFEWAY. And sure enough, if I bother to look at it, it only lists items and brands that I typically buy. Safeway is clearly using info gained from my use of their card, and using it pretty well.

Another store does have a card-related gimmick that I look forward to. When I shop there, the bottom of my receipt tells me both how much I saved today, and how much I have saved over the course of the year. It’s silly, but I love to see that number go up! It doesn’t keep me from going to other stores, of course, but it seems to be part of their “brand,” and it has obviously worked on me.

Don’t forget that to get a card, you have to give the store a bunch of information about you. Yeah, they don’t know where you live now, but they DO still know that you’re a X-year-old male. I just reviewed the application for the card at my friendly local Übermart, and they ask for your age, your income, the ages of your children, if any, your income, whether you’re a homeowner or a renter, not to mention your address.

Now, they never bug you to update this information, but for most people it is probably reasonably accurate.

The store can determine things like: After we rearranged the softdrink section, sales of Gatorade to males 15-25 dropped by 7%! Women 30-40 are buying more “wholegrain” products. People with large families buy large quantities of toilet paper when it’s on sale.

The can use this information to target their advertising and change their store displays, even how the stores are laid out. They can also take the information to their vendors, and say, “We have the best sales to the mid-to-hi income 45-60 demographic in our area. If you offer us a discount, we can really move your lowfat pate.”

Not in my case. They don’t have my correct age, name or address. I would have put the wrong sex down too, but I was afraid the clerk might look at me funny.

I guess we’re lucky – we don’t shop ads, don’t clip coupons, and just buy what we need whatever the price is (yeah, this backfires – I didn’t know that for a week in December that tomatoes were $5/lb!).

Plus, at any place that I’ve been to that uses those nasty cards (Meijer doesn’t), they always ask me for my card as if they expect that I have it, and when I tell them I don’t have one, they always use the “store card” anyway.

We do use one card, but it’s not for discounts. It’s for points earning. It’s a little, independant grocer in Mexicantown with the best meat and prices that are just excellent anyway (yeah, cheaper than Meijer). This is counterintuitive to me, because usually things in the ghetto or big cities (this is Detroit proper) are pricier.


Sure they can tell. Compare it on a reciept by reciept basis. After all, if you bought lemons and apples, they’re both on the same reciept.

They can tell this, as well, in aggregate. “Between the dates of XX-YY to YY-XX, we handed out X number of coupons for product Z. Sales of product Z went up 0.01%. During the same period, we also handed out Y number of coupons for product X. Sales of product X went up 25%.”

Do they really need to know that you, specifically, bought more product X in a given time?

You’re right about a single receipt. But without customer tracking, you lose the link between receipts.

They don’t NEED to know, but they sure WANT to. As to why, we will have to get a Madison Avenue type dude in here or someone more versed in marketing than I to answer that question.

Let me give you a different perspective on the original question. I own a small bookstore, and we’re planning to introduce a “frequent buyer” program. Here’s why:

First, there are a lot of people who buy from multiple stores. They may buy their specialty books from me, their mass-market paperbacks from the stand at the grocery store, and their hardback bestsellers from Costco. If they have a frequent-buyer card that gives them incentives for purchasing more here, I may be able to get a larger share of their business.

Second, my point-of-sale system can track things like seasonal changes (e.g. things that sell better in June or around Christmas), but the frequent-buyer card tells me more. It helps me figure out what tourists buy vs. what locals buy. It tells me what combinations of things people buy at different times. All of this, in turn, helps me to adjust my inventory. For example, one of my specialties is American Indian books. if I find out that people who buy those also tend to buy mysteries (or whatever), then I’ll put those two sections side-by-side and promote them together (and stock more mysteries, too).

Tracking what specific items one specific person buys isn’t important to me. It’s handy sometimes, when a customer comes in and says, “I special-ordered a book from you last March as a gift for my Dad. I want to get another from the same author. What was that book?” That’s more a benefit to the customer than it is to me.

As a small retailer, I don’t have the resources for major data mining. I’m a privacy advocate, so I won’t be selling the data to anyone else. In a nutshell, I think these cards will help me to sell more books, increase customer loyalty, and tailor my inventory to my customers better.

I like them. I have them on my keychain. I go jogging with no ID on me, but I carry my keychain. I like to think that if I get assaulted and left for dead on the jogging path, the police will be smart enough to run my grocery store tags through a scanner to find out who I am and where I live. I hope they’re smart enough.

There’s a CVS I go to nearly everyday (it’s right down from my office). I don’t have a card, so the cashier will grab one off a stack and scan it, giving me the “bargain” price on whatever I’ve purchased that’s on sale.

What’s the purpose of having the cards if any old schmoe can walk in and get the same deals?

I’d put the question slightly differently:

Why make your customers go through the hassle and annoyance of filling out forms and carrying around cards in order to get savings that should just be regular markdowns.

There was a time when supermarket sales and specials applied to everyone who happened to be shopping there on that day.