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Rewards Card costs

2002-07-03 17:12:08+00 by Dan Lyke 23 comments

Genehack had a link to an explanation of why "Savings Cards" aren't. One of the ventures Todd and I were involved in during the .com boom was a project to bring rewards cards benefits to the local merchant. It failed for a variety of reasons, but one of them was that we couldn't find ways to pay for the (substantial) costs involved with implementing such a system. We'd chalked up the supermarket's successes to a better information technologies infrastructure, but this article claims (and backs up my observations of Albertson's, which we've got about block from the house and is therefore our store of last resort) that they're not finding any lower costs than we were.

[ related topics: John S Jacobs-Anderson New Economy Todd Gemmell ]

comments in ascending chronological order (reverse):

#Comment made: 2002-07-03 17:41:37+00 by: other_todd

I guess I don't see the problem with the sort of segmentation that the CASPIAN rant gripes about. (It's a good rant, though; very informative.)

To use the actual example they cite - if a store had twenty feet of candy with very slow sell-through, but didn't have enough baby products space to keep all the brands in stock that customers wanted, they'd be foolish not to shift the space over. If you don't stock what the customers are buying, then you are on the road to going out of business.

Grocery stores are low-margin anyway (comparatively, in the retail world) and they MUST keep only merchandise that will move.

The CASPIAN segmentation gripe seems to be that stores are letting the buying habits of their "frequent fliers" be the primary information source on what they will and won't stock. Well, um, duh. I mean, isn't that the perk of BEING a frequent buyer - getting more of what you want (even if it's to other shoppers' detriment)?

Since CASPIAN is an organization against the various savings-cards schemes, I think what they're REALLY annoyed about here is that, since they won't get the cards, they effectively don't get a vote in what the store stocks anymore. I think my response would have to be somewhere along the lines of "tough luck."

I also think their argument is a little strained. For example, watching the cards is not and probably will never be the ONLY way stores track their best sales - there is also good old inventory management (i.e. counting what you have and what you sell), and I don't think any grocery chain is going to be so stupid as to ignore that completely in favor of card tracking.

In other words, if Mr. CASPIAN worries that the store is going to stop offering his Wheaty-O's because he refuses to get a magic card, then the best he can do is to keep buying the Wheaty-O's. If enough other people are buying them too, card or no card, the store will keep offering them.

And if not enough people keep buying them, then not all the card plans in the world will suffice to keep them on the shelves. But you will never see me clamoring for a store to keep something in stock that ain't selling well. That's just unreasonable.

#Comment made: 2002-07-03 18:10:38+00 by: ebradway [edit history]

Another marketting fad... I keep a wallet full of the reward cards to avoid the price gouging when something is marked down. I also stock up when an item is grossly reduced (and avoid buying other stuff). But I expect to go to four different places whenever I go out for groceries: Big Lots (I can deal with dented and mislabeled cans at 1/2 the price or better), a roadside veggie stand (in Tennessee, they rarely have organics but at least I'm buying closer to the source - right now the grocery stores are selling California stawberries while the roadside stands have local strawberries), a mainstream grocery store, and a 'health-food' oriented grocery store. I shop for the best price but try to buy quality ingredients.

Oh yeah, I swipe my reward cards from behind the counter and never fill out the customer info. It drives them crazy.

#Comment made: 2002-07-03 18:16:48+00 by: Pete

Incorrect name, address, etc. on mine; and I always pay with cash.

#Comment made: 2002-07-03 20:37:12+00 by: Dan Lyke

I wonder what the rewards card programs are going to do to recruiting new customers. I find that Safeway and Albertsons have a more "downscale" selection and are more expensive than United, my grocery shopping destination of choice. Maybe they'd be cheaper if I used a rewards card or shopped for the specials (Albertsons dropped their rewards card program and introduced some sort of markdown which is trumpeted as "you saved..." by their cashiers when they hand you the receipt), but looking at prices in general is reinforcing my belief that both are stores of last resort.

So while they're cementing their relationship with their current customers, my guess long-term is that they're doing that at the expense of acquiring new ones.

Pete and Eric, it'd be interesting to know how much of their income derives from selling the mailing list versus just knowing the buying habits associated with a particular consumer. Mailing lists are apparently profitable, but I'd think that if you just used a single card, no matter who it was assigned to in their database, they'd be finding interesting correlations. But then every time I assume someone's doing the obvious things with data, I'm wrong.

#Comment made: 2002-07-03 21:16:07+00 by: Dori [edit history]

Two data points:

  1. I went grocery shopping yesterday, with two stops: the Farmer's Market on the Plaza, and the local Safeway. At the former, I got some lovely organic veggies. At the latter, I saved $36 by using my Club Card. Dunno about you rich folks, but $36 means something to me in this economy; enough that it's worth giving up some privacy. And hell, I live in a small town anyway, so it's not like I think that I have any actual privacy at the grocery store.
  2. Safeway Club Cards don't require you to have an actual physical piece of plastic. All you need is a phone number of someone with a Club card. If you want my home phone number, drop me an email. If you use it, you'll get discounted prices at your local branch (and be greeted as "Mr. Smith," I think). I'll get some free United Airlines miles and plausible deniability that I ever made any of my purchases myself. Win/win.

#Comment made: 2002-07-03 21:23:32+00 by: Larry Burton

If more stores went the route of not requiring the plastic I would go back to using the discount clubs. I'm just getting tired of everyone wanting me to carry around another piece of plastic, tired of destroying wallets by stretching out the little card pockets so that they don't hold cards securely anymore and tired of the pain in the ass caused by that big stack of plastic in my back pocket. Mainly I object to the pain.

#Comment made: 2002-07-03 22:00:48+00 by: Shawn

Oh yeah, I swipe my reward cards from behind the counter and never fill out the customer info.

Huh? I don't think I'm getting the right mental picture here. You elbow your way into the checker's space (in front of their register) and swipe from there? And they want you to fill out cust info each time you use it?

I don't mind carrying plastic but I am oh so tired of filling out application after application to get anything done in this world. I refuse to get a card because of the hassle involved in getting one and because I don't believe the stores really have any need for them.

To expand on Dori's idea... I've always thought it would be a hoot to set up a website (or some other repository) of shared cards. Want the discount? Go grab a card number! I wonder if that violates some "member" agreement...?

#Comment made: 2002-07-03 22:21:17+00 by: Dan Lyke

Dori found a bug. Need to fix that.

Dori, I think the point of the article is that if you're shopping at a place with a card program, then you didn't save $36 at all. The place with the card program simply has base prices higher than the place without the card program, and overall you'll be spending more because they have to cover the costs of the card program somewhere. This matches my experience.

From a privacy standpoint, I've said before that I'd happily give Providian or FirstUSA open access to my medical records if I could get them to not send me any more rip-off credit card offers until after I get a lobotomy. I want to be a targeted consumer, if being a targeted consumer means that people are giving me the products I want, and not flooding me with advertisements for crap I have no interest in.

There's some danger that I won't become a targeted consumer, that the mass market will get filled and those of us on the fringes will get marginalized and end up paying higher prices, but for the most part right now I think I'm subsidizing other parts of the market, not vice-versa.

#Comment made: 2002-07-03 22:24:53+00 by: Dan Lyke

Shawn, there's a web site dedicated to sharing those cards, and for a while there were regular swap meets in some cities. I don't remember what it is, but I know it's out there.

#Comment made: 2002-07-03 22:39:42+00 by: Dori [edit history]

I think the point of the article is that if you're shopping at a place with a card program, then you didn't save $36 at all. The place with the card program simply has base prices higher than the place without the card program, and overall you'll be spending more because they have to cover the costs of the card program somewhere. This matches my experience.

But it doesn't match mine: as I've said, I live in a small town, and I don't have as many choices of places to shop as you big city folks. My choices are to shop at Safeway (as described), shop at Big John's (expensive because they aren't a chain, plus they don't carry many of the products I want), or leave town to find another store. Given those choices, I pick Safeway. And at that point, it's cheaper with a card.

And as you said yourself, Safeway might be cheaper if you had a card. So, use mine, and you've got the best of both worlds.

What was the bug I found? Did I forget to close a tag or something?

#Comment made: 2002-07-03 23:30:31+00 by: Dan Lyke

The bug is that ou forgot the / in your closing <ol>. So my HTML purifier saw at the end of the document that there were two <ol> tags open, closed the first one, which was empty, resulting in a <ol /> (and I've no idea why, because I should only be closing a few limited tags like that), then two </li> to close the open <li> tags (also something I should deal with), then the closing </ol>, the net result being that the second <ol > tag was misinterpreted as an opening one, and as of this writing the list is still open. I'll try to fix this on the ferry home.

#Comment made: 2002-07-03 23:44:55+00 by: Dori

I've closed the tags, so it should be better now--sorry!

#Comment made: 2002-07-04 01:27:49+00 by: Dan Lyke

Not your fault. That's one I thought I had under control. Besides, you should see some of the variations on HTML that Todd's come up with over the years...

#Comment made: 2002-07-04 05:08:58+00 by: ebradway

As far as swiping cards - go when the grocery store is busy. There is usually a stack of cards and applications on the customer service counter. Take what you need. If asked, just say you'll bring the app back filled out but you're in a hurry. Another option is to try the dumpster out back - a shopping option I haven't tried in over a decade.

#Comment made: 2002-07-04 05:25:32+00 by: Diane Reese [edit history]

It probably defeats the purpose, but the cashiers at my local Safeway each keep a reward card next to their conveyor belt, and offer it to shoppers who have "forgotten" their own. I usually use mine, which also accumulates eScrip towards cash for my kids' school.

By the way, my experience is that my local Safeway prices are among the lowest in my area, even without using the reward card. I guess I'm a weirdo, but I really don't care whether they know what brand of tampon I buy most often, and which pasta sauce I usually buy at the same time as the fresh tortellini. If I'm gonna be marketed-to anyway, I'd just as soon get targeted, so I don't have to recycle all those annoying coupons for diapers and dog food. I'll do occasional splurges at Trader Joe's, and my produce comes from the Sat. farmers market or The BOX. (I sure do miss Webvan, though, sigh...)

Tangential aside: For those in the Bay Area where it operates, I recommend The BOX (Bay area Organic eXpress). >=90% of my produce comes from them, and it's been a marvelous experience over the last 3 years. (Inquiries cheerfully responded to.)

#Comment made: 2002-07-04 19:07:18+00 by: Shawn

ebradway; I don't remember seeing any such stacks, and I always assumed the card wouldn't work until "activated". But I'll check that out ;-)

Diane; For the most part, I don't care that people know what I'm buying either. But then again, there's the lawsuit where a guy sued Safeway's parent company after [allegedly] slipping on some yogurt: The corporation tried to present his buying habits - lots of alcohol - to question his credibility...

#Comment made: 2002-07-05 02:00:16+00 by: Mars Saxman

Diane: We just cancelled a service like that up here in Seattle, called New Roots Organics - nice idea, good produce, but they were amazingly incompetent and we had trouble using all the food they brought. Looks like The BOX has a better deal, with two sizes of box delivered weekly; New Roots has only one kind of box, and they bring it either every week or every other week; neither arrangement was particularly helpful.

Loyalty programs - ugh. No thanks. But I'm fortunate enough to live a few blocks from an excellent farmers' market, so the path of least resistance leads right away from QFC, Albertson's, Safeway, and the rest.

#Comment made: 2002-07-05 06:41:29+00 by: Shawn

Mars, how are the prices down there? I only make it down to Pike Place about two times a year and I've never shopped for or bought groceries there.

#Comment made: 2002-07-05 20:15:48+00 by: Mars Saxman

Shawn: depends on where you're used to shopping, I suppose - and what you're looking for. The posted prices on fish are generally comparable to Larry's, but that's really the tourist price. If they recognize you as a regular customer they'll routinely knock a few bucks off the total. Meat prices are around the same as you'd get at a supermarket. The quality is quite good at Don & Joe's and ordinary at the other place (under the corner market building). For vegetables, it varies greatly, both by season and vendor. It pays to wander down the street before you start buying, since there are half a dozen vegetable stands and their prices vary. In general, anything that's in season is very cheap, and everything else tends to be a little more expensive than in a supermarket.


#Comment made: 2002-07-05 22:10:23+00 by: TheSHAD0W

You grabbed the card without filling out the info? I think that's a bit extreme, especially when they never check the info you're providing in the first place... Albertsons, for instance, thinks I live at 1311 Via Merde de Caballo.

#Comment made: 2002-07-07 04:57:05+00 by: other_todd

1311 Via Merde de Caballo ... -giggle- ... okay, I may be juvenile but I think that's pretty darned funny.

#Comment made: 2002-07-07 22:45:59+00 by: Pete

Rob's Giant BonusCard Swap Meet http://epistolary.org/rob/bonuscard/

#Comment made: 2002-07-07 23:24:09+00 by: meuon

My BiLo Bonus card currently thinks I am a 40 year old black female with 13 kids that lives on 12k per year that lives at 743 East Main (our parking lot) and buys LOTS of coffee. Next week I think I'll be Bill Clinton. I fill one out every few weeks and put the spare cards in the freezer..(don't ask..) for use later as well as give them to other people. I figure if the system gets erroneous enough data they'll eventually stop this nonsense. GIGO!