Grocery Rewards Programs: Deep Discounts or Data Mining Risk?

(Image by Eddie Welker via CC BY 2.0 )

“Thank you for shopping here! Would you like to enroll in our shopper’s loyalty rewards program?” I am always puzzled when I hear this phrase after I pay my groceries at a supermarket counter.

There was a time when I had a rewards card, loyalty program or shopper’s appreciation card from all of the major supermarkets. I believed I had to get one.

What did I get out of it? Like a credit card rewards program, I accrued points for discounts. Or, I would get a coupon in the mail or via email.

How much is that worth after I spent a few hundred on groceries?

It wasn’t until years later that I learned that corporate supermarkets were clandestinely benefiting from my allegiance to hand over my reward’s card to be scanned by the cashier.

Who Benefits From that Rewards Card?

Corporations data mine your shopping habits and your personal information whenever your rewards card is scanned. What’s the big deal?

OK. Why does your supermarket cashier aggressively ask for your rewards card or if you want to apply for one?

Here are some hard facts about American shopping habits and rewards cards. You may be enabling your own data mining more than scoring perceived discounts.

How Much Do You Spend on Groceries?

The average American family, comprised of four people, spends over $300 every week on groceries. Even though we know better, most people don’t shop with a shopping list, or consult sales circulars, or coupons when they shop.

So, the tendency is to go buy your staples and then buy whatever strikes your fancy, which adds up. The grocery rewards program may be very enticing in that regard. Consider:

• American shoppers enroll in multiple rewards loyalty programs and hold almost 4 billion memberships collectively
• Memberships in these programs increased by over 15% between 2015 and 2017
• Loyal shoppers enrolled in these programs spend over 66% more on purchases than non-enrolled shoppers
• 55% of loyalty program shoppers recommend their supermarket to friends and families
• Families with incomes over $150,000 are 32% more loyal than working class families

Those are impressive shopper stats. But, what do loyal shoppers actually get for their loyalty?

Corporate supermarkets have razor thin profit margins and don’t allot much money for loyal shoppers.

Wonder why shoppers apply for multiple rewards programs among multiple stores? To spread out rewards.

When the supermarket scans your card, you usually get sent e-coupons.

You may accrue points for in-store discounts. Getting free products depends on the retailer, region, and strategic times of the year.

Most retailers don’t offer free goods. A study suggests you may save $20 per purchase by not enrolling in these programs since most loyal shoppers spend more.

So that begs the question: what do retailers get out of loyalty programs?

Data Mining Gold

This may not seem valuable to you, but supermarkets use the information collected from your rewards card to improve their business models.

First, you must offer your personal information to enroll in a loyalty program. Then every time your card is swiped retailers learn:

• What you regularly buy
• Thing you don’t buy or stopped buying
• How much you spend on groceries daily, weekly, monthly, and annually
• What items you buy occasionally
• Whether you use in-store services like a pharmacy or ATM

By using this information, retailers can adjust their inventories accordingly, increase or lower prices accordingly, and offer promotions during times of the year shoppers usually make once-in-a-while purchases.

After all, loyal shoppers spend 66% more than non-enrolled shoppers.

Some Worthwhile Grocery Rewards Programs

If you are fond of shopper loyalty programs, some are better than others. For example, with ShopRite, you earn points for free food products after spending $400.

Giant’s loyalty program offers a 10-cent discount on every gallon of gasoline up to 25 gallons per every 100 points. Stop and Shop offers a similar program.

Still, it can hardly be refuted that retailers gain more from your shopping loyalty than you.

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