12.7.13

THE END OF A MAJOR ANNOYANCE?

Is anyone else with me on the folly of rewards programs?  You carry one debit card for purchases, and a fist-full, or perhaps a key-ring-full, of rewards cards, and possibly store-specific credit cards in order to qualify for the store rewards, and then whether you have the cards or not, you have to play twenty questions with the clerk to make a simple purchase.  "Sorry, sir, headquarters requires us to ask these things."  There's an encouraging report in Time.
But considering that until recently loyalty program totals have generally only gone upward, and that most program categories saw robust growth, any decline in memberships is significant. Combine that with the fact that the percentage of memberships that are active has been falling across the board, and what becomes apparent is that many consumers have grown sick of having to fumble through a pocketbook to find a loyalty card at the grocery store.
Yes, and public attention to the National Security Agency gathering metadata on our internet use and telephone calls has had a salutary effect on public awareness of corporate snooping.
“Savvy customers understand that loyalty programs gather and utilize customer data to make marketing decisions,” the [marketing research firm] Colloquy study reports. “If programs are not crystal-clear in providing benefit to the customer in exchange for that information, and are not clear in their privacy policy, consumers can back off from participating.”
The parent company for Jewel-Osco discontinued its rewards program, going to low prices for everybody. Hallelujah, that's the one card I was using, good now for scrap.  It appears, though, as if some businesses use their data-mining as a way to practice perfect price discrimination.
As CNBC and the Associated Press have reported, Safeway and Kroger’s, among others, have been stepping up efforts to use customer’s shopping histories to present them with personalized deals and coupons to boost spending. “There’s going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people,” Safeway CEO Steve Burd said earlier this year, according to the AP.

Such a concept may strike some shoppers as being inherently unfair: How would you like paying twice as much for hamburgers or coffee than the person checking out in front of you? Then again, a scenario like that is likely to make you sign up for the loyalty program, which is sorta the point. Many customers will, in fact, love personalized pricing because it’ll make them feel special—like they’re getting a unique deal created just for them.
I suppose that depends on whether your model of price discrimination is the kindly town doctor who extracts consumer surplus along with that appendix, or you see the loyalty program as the rules of the souk without the haggling.
Albertsons [the parent company of Jewel-Osco] and its sister grocers aren’t the only supermarket chains skipping loyalty programs and personalized pricing. Whole Foods and Aldi represent the high and low end of grocers that have done very well without resorting to loyalty programs. But some analysts are skeptical that a business model without loyalty programs or customized pricing and marketing can be successful down the line. “In the future, it will be increasingly difficult for Albertsons to compete against retailers like Safeway that have loyalty programs and are advancing down the road towards personalization,” Jon Hauptman, partner at Willard Bishop, told Supermarket News. “That’s where the puck is headed.”
Speaking of pucks, the Safeway affiliate in the Chicago area is Dominick's. We shall see how their rewards program fares in the same neighbourhood as Jewel-Osco and Aldi and Whole Foods.  And as far as rewards programs themselves are concerned, once upon a time green stamps were all the rage.

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