In the beginning of the summer, Shaw’s supermarkets in New England greeted customers at the door and asked them to turn in their orange store loyalty cards.  In return, Shaw’s gave customers a coupon and a promise that every customer walking through the door would receive the same price without having to worry about a card.

This initiative is part of Shaw’s revamping strategy that includes significant reinvestment in its 169 stores.  Loyalty programs are ubiquitous in supermarkets and drugstores, making Shaw’s an exception to the rule.  Loyalty programs are on the rise as membership grew by 26.7% from 2010 to 2012.  Loyalty programs are highly valued in the industry because they allow retailers to parse, analyze, and sell customer data as well as track buying habits and encourage repeat visits with unique coupon offers.  Supermarket retailers are also using smartphones to create apps that let customers keep grocery lists, receive coupons and share this information via social media.   Retail analysts suggest that the data retailers glean from these loyalty programs is powerful as it allows them to tailor offerings specifically to shoppers, provide customized deals, and manage inventory more efficiently.

Shaw’s was owned by Supervalu and offered customers high prices with shabby stores, and lost a lot of customers as a result.  Shaw’s most important priority is to get people back into the stores.  According to Shaw’s, tracking purchases is one way to do it, but it’s not the only way.  Other retailers, like Albertsons, are eliminating their loyalty programs and placing more emphasis on learning about neighborhood, rather than individual preferences.

Some customers are delighted that Shaw’s has eliminated store cards.  Consumer advocacy groups have protested store cards as an intrusion into consumer privacy.  One consumer advocate suggests that data about food collection might one day be used by the government or insurers to draw conclusions about our health.  With recent concerns about the government accessing phone records and e-mail data from private companies, some fear that global corporations will share our food purchase information.  Shoppers want retailers to be clear in their privacy policies and what the benefits of participation are.  If retailers cannot provide that, then customers are increasingly less willing to become involved with the loyalty program.

Discussion Questions:

1. Why did Shaw’s drop its loyalty cards?

2. Do you believe this was a smart move?

3. Do loyalty cards make you loyal?  If so, what behavior do you exhibit that makes you loyal?  If not, why not?

 

SOURCES: Brad Turtle, “A Disloyalty Movement? Supermarkets and Customers Drop Loyalty Card Programs,” Time Business, July 11, 2013; Sarah Shemkus, “Dropping loyalty cards puts Shaw’s in the minority,” Boston Globe, July 06, 2013