Posted on: Thursday, August 5, 2004
Loyalty cards stir distrust in some
By Sherry Anne Rubiano
The Indianapolis Star
It's a familiar sight: Signs hanging in the aisles of the local grocery store, inviting customers to save 99 cents on a bottle of grape juice — as long as they carry the store's preferred shopper card.
Gannett News Service But others bristle at the thought of having to give retailers their name, address and other personal information in exchange for a card that allows the store to track their every purchase.
Some are so put off that they've joined a national opposition group.
John Vanderlippe of Nashville, Ind., joined Consumers Against Supermarket Privacy Invasion and Numbering (www.nocards.org) four years ago and is now the group's associate director.
Vanderlippe said he drives an hour from his home to avoid shopping at loyalty-card stores because he isn't sure how the stores will use his information.
"It's better to limit the amount of data they have on you," he said.
Loyalty cards are most popular at supermarkets and drugstores. Many other retailers, from shoe stores to Hallmark Gold Crown stores, also issue these plastic cards, promising savings and rewards.
More than half of food retailers offer loyalty programs, according to the Food Marketing Institute, based in Washington D.C., and about 75 percent of participants use their cards at least weekly.
According to the Food Marketing Institute, this technique has been around since the 1950s when S&H Green Stamps rewarded grocery store and gas station customers with stamps redeemable for appliances, furniture and other merchandise.
With advances in technology, the reward programs grew more sophisticated, using scanners and computer databases to collect personal data and track customers' spending.
Retailers benefit from tracking consumers' purchases by using the information to analyze shopping habits, refine marketing programs, fine-tune their product mix and identify the most appealing promotions, according to the marketing institute.
Raymond Burke, a business professor at Indiana University, said retailers use the information to create customer profiles. That allows stores to identify which customers are spending the most money and improve service for those customers to encourage them to spend more.
Walt Heller, research director at the trade publication Progressive Grocer, said stores have little incentive to give the data to third parties.
"Frankly, I would trust the supermarket because they don't want to tee off a customer," Heller said.
Many stores build trust by following policies that prohibit the selling or sharing of customer information with third parties. Marsh, Kroger, CVS and Hallmark all have such policies.
Consumers who embrace loyalty cards can benefit by purchasing products at lower prices and winning rewards, retailers said.
Phyllis Brown is a fan of loyalty cards; she has three. She said she uses her Marsh Supermarkets card at least three times a week.
"I use it all the time," said Brown, 71. "I just automatically use it."
She recently earned a free half-gallon of orange juice with her Marsh card. So far this year the card has saved her $121.36 on groceries, she said.
Burke said shoppers need to evaluate whether the tradeoff between prices and personal information is worth it.
"When you share information with a company, if they can improve your shopping experience, then that's a good deal," he said.
Many consumers see loyalty cards as a quick way to save money. More than 70 percent of shoppers participate in two or more such programs, according to the ACNielsen Frequent Shopping Survey.
Preferred-shopper cards offer consumers discounts on products and other rewards for sharing personal data with retailers. The stores say the data is used for purposes such as fine-tuning their product mix.
