Thursday, May 15, 2008

Let's Go Shopping: Don't Forget the Card

I think we can all agree that grocery shopping is a drag. But we've all got to eat. So this week we'll examine some ways to save money at the grocery store.

When grocery stores first started offering "member savings cards" a.k.a loyalty cards people were freaking out. They were worried that retailers would be more out of control than an drunken underage coed on a Girls Gone Wild video. But as a marketing data junkie who salivates at the idea of attaining shopping trend data I can assure you grocers haven't dug into the treasure at hand. That's because they can't. Sorting through all of that data is expensive. Though the cards were first introduced in the mid-90s grocers are just beginning to become sophisticated in customizing offers based on data collection.

And really what sort of privacy concerns are there? Are we worried that Safeway now knows where we live and what our phone number is? Or is the fact that we spent more last year on Doritos and Chips Ahoy than broccoli? Well, that's not really the point of today's post so let me get back on task.

Club Card savings, are they for real? Yes and No. You really do save on items purchased with the loyalty card. If you didn't have the card you would pay more. But those savings are inflated or "padded" in industry terms. Every product has a MRSP (manufacturers retail suggested price) and all retailers have a cushion to play with that price--that's how they make a profit. They also know what the competition charges and so they all hover around the same price in comparison. They'll also pick a few items to put on sale, shrinking their margin a bit. This is done to get you in to the store, so you'll buy more. Actually it's not that different from coupons. If you don't have the coupon, you don't get the savings. Don't have the card, don't get the savings.

But coupons aren't trackable. Loyalty cards give retailers the ability to know who their customers are and what their preferences are. Even if they don't use it to it's fullest extent the marketing departments use the data to create advertising campaigns and budgets. And although I currently don't worry about what grocers know about my purchase habits I do watch how they use the data. In the past two years the grocery industry has been putting the data pieces together albeit slowly. It's up to consumers to question how data is used and demand that it is not shared.

So you should use loyalty cards just as you would coupons. Don't buy something just because it's on sale. Buy it because you'll use it AND because it's a good price. Don't buy the Philly Cream Cheese because it's slightly lower. Buy it because when it's on sale it's cheaper than the store brand.

Oh but wait I've got more....

Don't abandon your coupons just because you've got a loyalty card. Use coupons on top of club savings to save even more.

When the sign says "10 for $10" you don't have to buy 10 to pay just $1 each. I rarely buy 10 and I always check my receipt to be sure I've only payed the sale price. A clerk once tried to tell me otherwise, but the register gives the sale price.

Albertson's dropped their loyalty card and offers savings to everyone. They say this is to differentiate themselves in crowded market. Could be. They'll also save a lot bucks in data marketing analytics. Probably a wise business choice.

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