Your wallet may be packed with them already, but more supermarket loyalty cards are coming your way, and some are bringing “perks.”
More cards might simply sound like more savings. But retailers face a challenge in winning over some shoppers who say they are tired of all that plastic.
“Just give me the lowest-priced groceries,” said Michelle Kassen, a 52-year-old Elkhorn resident who does most of the shopping for her family of four and is enrolled in three supermarket loyalty programs.
Card critics say people with the most cards are the least loyal shoppers because they’re just using the cards to hop from store to store to get the lowest prices. And, the critics say, people don’t use all the loyalty cards they sign up for.
But grocery retailers say their card programs drive sales. And they say new features will make the cards easier to use and more rewarding for frequent shoppers.
The cards have become even more important to grocers who are competing for sales: Studies have found that shoppers increasingly are spreading their food dollars around, abandoning the idea of having one go-to grocery store.
Loyalty can help counter that trend.
Nine percent of shoppers said they have no primary store where they do most of their grocery shopping, up from 2 percent in 2011, according to the Food Marketing Institute’s 2014 study of U.S. grocery shopping trends.
And of shoppers who do have a primary store, fewer say that store is a traditional supermarket — 54 percent vs. 56 percent in 2011. Warehouse clubs and other types of stores have picked up shoppers.
Local retailers are hoping their revamped card programs catch shoppers’ attention:
» Hy-Vee is replacing its Fuel Saver cards with new “Fuel Saver + Perks” cards. The cards still provide a gas discount but now also will offer prizes, such as a kitchen makeover, along with special offers and coupons.
» Supermarket operator SpartanNash, which doesn’t have a loyalty program at its Bag ’N Save and No Frills stores, recently launched its Yes card at its six newly remodeled Omaha Family Fare stores. The card offers savings on gas and pharmacy items, plus digital coupons and rewards for spending in product categories such as produce, pet items and baby items.
» Lincoln-based Russ’s Market recently retired its Russ’s Privilege Plus Card and launched a Russ’s Community Rewards card. Shoppers earn points and can spend them on items in-store or donate them to a variety of community agencies.
» Baker’s has updated its Plus card to provide more digital coupons and personalized, lower pricing on items that its most frequent shoppers buy.
» Whole Foods Market, which hasn’t had a card, is testing one in Philadelphia. The card lets shoppers accumulate points they can cash in for products and services.
» Target, whose stores carry groceries, has a REDcard that offers free shipping and 5 percent off. It’s testing new REDperks cards that let shoppers also rack up points to earn rewards and another 5 percent off.
Research suggests shoppers aren’t especially engaged with loyalty programs, even as the cards proliferate. The typical American household holds memberships in 29 loyalty programs, up from 22 programs two years ago. But a typical household is active in just 12 of those programs, market researcher Colloquy reported this year.
The programs include grocery cards as well as those of other retail stores, restaurants, financial services, travel and other sectors — a total of 3.3 billion memberships.
“It’s more challenging now than ever before because everybody has a loyalty program. And just because you have a program doesn’t mean it works,” said Mark Johnson, chief executive of marketers association Loyalty360.
One consumer researcher said people who use loyalty cards the most, in fact, are the least-loyal shoppers.
“Consumers are really actively engaged in getting deals,” said Kurt Jetta, founder of Connecticut-based TABS Group, a business analytics firm that serves the consumer packaged goods industry. “This is just one tactic in that. It’s not getting consumers to be more loyal at all.”
That sounds like Kassen, the Elkhorn grocery shopper, who recently added the Family Fare Yes card to the Hy-Vee and Baker’s cards in her wallet. She said she’s frustrated at having to carry a card to get the best price, while also turning over access to her personal shopping history.
Despite membership in all the loyalty programs, she said, she’s not loyal to any one store.
“I try to go to where the best deals are,” she said. She buys meat at Fareway Foods and looks at weekly circular ads. “Wherever the best deals might be at the time — Baker’s, Hy-Vee or Family Fare — that’s where I go.”
Other shoppers say they don’t mind carrying the cards.
Lori Amlee, 54, of Omaha filled up her SUV on Friday morning at the gas station at Hy-Vee’s Stony Brook store.
“It prompts me to always come to Hy-Vee,” she said of the card’s discounts.
Hunting for bargains based on which store is offering which deals? It’s not for her, Amlee said.
“It’s hard enough just to get to the store,” much less keep track of different stores’ offers and loyalty programs, she said.
Jetta said his surveys show that the number of people who say they try to shop at stores with a loyalty card has fallen, and that stores can achieve better sales gains by making special offers to all customers and avoiding the expense of operating a loyalty card program.
Granted, stores use loyalty cards to collect valuable data on shoppers’ spending. But retailers like Walmart, which uses an “everyday low price” strategy instead of a loyalty discount program, still have access to consumer data.
Walmart, a giant in the grocery business, collects data at cash registers about what items are bought. And it can capture shopper data in part through its Savings Catcher program, in which shoppers upload their receipts and get a refund if an item is sold cheaper elsewhere. Walmart considers Savings Catcher its own version of a loyalty program, as it’s intended to reassure shoppers they won’t find a better deal elsewhere.
Shoppers say they are satisfied with programs that let them accumulate and redeem points, according to Bond Brand Loyalty’s 2015 report on loyalty programs, but there’s a danger if that’s all a program offers.
Some retailers are “locked into an endless cycle of one-upmanship and outspending the competition on rewards,” the report found. The advisory firm tells clients to “become a loyalty brand, not just a brand with a loyalty program.”
Technology market researcher Forrester agrees. It recommends that retailers keep loyalty programs but expand customer-loyalty efforts to more areas of their businesses.
“Loyalty has become synonymous with points, discounts and rewards, not with the customer’s emotional loyalty and devotion to a company, product or service,” Forrester analyst Emily Collins said in a recent report.
An emotional connection is one aspect of Russ’s Market’s new program, said Marketing Manager Nathan Albright. Shoppers can either redeem points in the store — for example, 2,000 points buys a loaf of banana bread or a pound of apples — or can donate them to Lincoln and Hastings-area charities. The Food Bank of Lincoln, for example, provides one meal to a family of four in exchange for 1,600 points.
Russ’s said shoppers earn 10 points for every $1 spent.
The new program also did away with separate prices for cardholders and non-cardholders, Albright said. Now “every price is the ad price.”
The changes seem to be working, Albright said, with customers shopping more often and buying more each time they shop. People who used to just stop in at midweek to restock on bread and milk are “starting to choose us as their primary store,” he said.
Hy-Vee said it was aiming to add a community contribution element to its loyalty program, which is undergoing changes.
The Iowa-based chain’s Fuel Saver card has boosted sales since it was introduced three years ago, offering fuel discounts tied to certain in-store specials, said Drew Holmes, a company vice president. With its new “Fuel Saver + Perks” card, launched this summer, customers are entered in drawings for prizes such as a vacation, a home makeover or a car.
Shoppers were looking for more from their card, Holmes said.
“It’s just another reason to shop at Hy-Vee,” he said.
One thing retailers are not doing is getting rid of fuel savings. With fuel prices so competitive, “if you’re able to give somebody a few cents off to a dollar-plus off on their gas, it’s a big deal,” Holmes said.
Most shoppers may save only a few dimes or dollars at the pump by racking up fuel points. It’s a fraction of their total grocery bills, but retailers such as Kroger have been successful in driving repeat business with the incentive to redeem fuel points, said Johnson of Loyalty360.
“There is a highly irrational, emotional attachment to fuel,” Johnson said.
SpartanNash’s Yes card has a fuel component, in a partnership with QuikTrip. But the program makes its biggest connection with shoppers by using sales data to produce coupon booklets and other offers specialized for individual shoppers, said Linh Peters, vice president of marketing.
“That engenders loyalty, and that increases their frequency in terms of when they shop us and how often they shop us, and they’re getting what is important to them,” she said. “As a consumer it actually makes you feel like Family Fare does know you and values who you are.”
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