business news in context, analysis with attitude

The Chicago Tribune reports that Supervalu-owned Jewel-Osco “is testing a program that examines a customer's purchases and allows the store to offer significantly larger, targeted discounts on products they have purchased in the past, hoping it will be a new weapon in its battle with discount giants like Wal-Mart Stores Inc. and Costco Inc. that have been luring away customers for decades with low prices.” In addition, the program “offers discounts on items the store believes customers might try based on their purchasing history (and) will offer regular shoppers a discount coupon they don't have to clip.”

The discounts are made available when shoppers enter the store and swipe a “Jewel-Osco Preferred Card and receive a sheet of paper containing discount offers for a dozen items they have purchased or might be interested in. Discounts are automatically processed at the checkout when the Preferred Card is scanned.”

According to the story, “The company is using an information resource that has been virtually untapped since Jewel-Osco introduced its loyalty program more than 20 years ago.” And it is specifically designed to address the fact that only three percent of the retailer’s shoppers were redeeming coupons delivered through more traditional methods.
KC's View:
We just hope they’re using it for more than just offering targeted discounts.

The problem with so many loyalty marketing cards is that they are have little to do with loyalty – they’re just another way of providing coupons or coupon equivalents.

You can only foster so much loyalty by lowering prices, because you’re creating or feeding into an environment in which anyone can succeed just by charging less. And you can always charge less, depending on how much you’re willing to lose.

At some point, it isn’t loyalty. It’s just bottom feeding.

Loyalty marketing ought to be something completely different. It ought to be a way of proving to customers that the store is loyal to them in ways that have nothing to do with price. And the data generated by transactions can be used to create programs that demonstrate that loyalty.