1. Shopper Loyalty ProgramsTechnology
Data Make the
DifferenceRumors of loyalty cards’ death are greatly exaggerated, analysts say.
By John Karolefski
Consultant Mark Heckman, former VP of marketing at
Indianapolis-based Marsh Supermarkets, recognizes that a
number of “good retailers” have abandoned their programs,
while other successful retailers feel vindicated because they
chose not to invest in electronic card marketing.
Michael Schif, managing partner of Partners in
Loyalty Marketing, a Chicago-based consultancy, pre-
dicts: “More stores will abandon their cards. It will be at
a slower rate, and concentrated to those who see it as yet
another way to deliver coupons.”
But not everyone agrees with this promotional obituary.
Several analysts, consultants and grocers are quick to
rally behind loyalty card programs because they continue to
be successful. Others hedge their bets by admitting that the
“cards” themselves may disappear, but the programs need
to remain in place if stores want to thrive and fourish. Te
key is accumulating and using shopper data appropriately.
“A well-designed loyalty program that strategi-
cally uses customer data to make price, promotion and
assortment decisions will position retailers to under-
stand and best satisfy the needs of customers. Tis, in
turn, will give retailers the best chance to compete in
a sustainable manner over the long term,” says Graeme
McVie, VP and general man-
ager of business development
for Toronto-based Precima,
I
n the past 18 months, Albertsons, Shaw’s,
Star Market, Acme, Jewel-Osco, Pathmark
and Waldbaum’s have discontinued their
frequent shopper card programs. To main-
tain customer loyalty, these grocers will
focus on everyday low prices on staple items,
and specials listed in weekly sales circulars.
Is a trend emerging? Is what seemed
like the birth of a breakthrough promo-
tion three decades ago finally fading away?
126 | Progressive Grocer | Ahead of What’s Next | February 2015
the data analytics division
of LoyaltyOne.
“Te retailers who
best satisfy the needs of
customers will win in today’s
competitive marketplace by
earning the loyalty of shop-
pers,” he adds. “However,
retailers that don’t have loyalty
program data will have limited vis-
ibility to shopper behavior, and risk
putting themselves at a competitive
disadvantage.”

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3. Shopper Loyalty ProgramsTechnology
Cards Carrying On
Loyalty card programs in the grocery industry
were introduced in 1985 by Richmond, Va.-based
Ukrop’s Super Markets as a way to get to know
customers by name and understand the behavior of
the most valuable shoppers. Tis unique promotion
— revolutionary at the time — spread throughout
the grocery industry until it seemed as though
every grocery operator had a card program.
A 2014 Food Marketing Institute (FMI) report
revealed that 81.3 percent of U.S. supermarkets
emphasize a frequent shopper/loyalty program as a
competitive strategy.
Critics of loyalty cards claim that the prolifera-
tion of programs has diluted the benefts. Shop-
pers are known to have three or more such cards
dangling from their key chains. No one is loyal to
any single retailer.
Don’t tell that to shoppers at Pittsburgh-based
Giant Eagle, which operates nearly 400 retail
locations in Pennsylvania, Ohio, West Virginia
and Maryland. Its Advantage Card, launched in
1994, is the primary vehicle used to reward cus-
tomers for shopping. Te ways in which custom-
ers receive value through the card include weekly
sales, e-ofers, digital coupons and Fuelperks.
Trough the last program, which began in 2004,
customers can use their Advantage Cards to earn
10 cents of a gallon of gas for every $50 spent at
Giant Eagle stores. Customers can earn discounts
up to and including free tanks of fuel.
According to company
spokesman Dan Dono-
van, “In addition to of-
fers available to a wide
array of customers, we
also on occasion use
customer purchase
history to deliver
unique and special-
ized ofers to smaller
groups of customers.”
Schif, of Partners in
Loyalty Marketing,
admits that chains
really mining the
data will continue
to keep their cards
because they deliver
tailored content and
ofers to customers.
Te industry’s best
example is Cincinnati-
based Kroger. Te
linchpin for its
enormous success is a
long-term partnership
with Dunnhumby, the
analytics frm that helped drive Tesco to major suc-
cess in the United Kingdom by mining shopper data
gathered through a card-based loyalty program.
Consultant Gary Hawkins writes in the book
“Te Essentials of Shopper Technology” (Outskirts
Press 2012) that Kroger — through its partnership
with Dunnhumby — has efectively “weaponized”
shopper data in at least three ways, to the detriment
of its competitors:
Personalized marketing: Te partners lever-
age data to provide highly targeted promotions
to shoppers, driving basket size, visits and reten-
tion over time.
Merchandising: Kroger takes the shopper seg-
mentations and insights created by Dunnhumby,
and drives this knowledge down to a store level,
using it to tune each store’s assortment and
inventory to the shopper base.
Direct monetization: Kroger charges brand
manufacturers millions of dollars annually to
access shopper insight and analytics provided
by Dunnhumby. Te manufacturers are ex-
pected to use the information to help the chain
improve its business.
Kroger has more than doubled the number of
premium loyalty shoppers, according to Hawkins.
“It is converting secondary, lower-value shoppers
into loyal high-value shoppers. Tis growth in rev-
enue is coming at the expense of other competing
retailers, often independents and midmarket stores.”
Leveraging Technology
Hawkins knows all about competing as an indepen-
dent against major chains. For years, he was presi-
dent of Green Hills Farms, a one-store operation in
Syracuse, N.Y. Te store earned a national reputation
for efective shopper engagement enhanced by a card-
based loyalty program. Today, as executive director
of the Center for Advancing Retail and Technol-
ogy (CART), he aims to help small food operators
take advantage of the newest technologies available.
CART, which is an alliance partner of the National
Grocers Association (NGA), powers a marketplace
connecting stores, brands and solutions.
One independent betting on technology is
Lubbock, Texas-based United Supermarkets. Tis
wholly owned subsidiary of Boise, Idaho-based Al-
bertsons recently expanded its loyalty program from
an April 2014 launch in seven Market Street loca-
tions in Dallas/Fort Worth to all east Texas United
Supermarkets, Amigos, Albertsons Market, Market
Street and United Express locations. Members may
use their phone numbers during checkout instead of
carrying a membership card.
Some retailers
have chosen
to refocus
marketing
efforts
elsewhere,
but those who
have continued
to invest in
their loyalty
programs —
and are now
leveraging new
personalization
and targeting
capabilities —
are seeing real
return on that
investment.”
—Trey Moser, Inmar
128 | Progressive Grocer | Ahead of What’s Next | February 2015

4. For more about shopper loyalty programs,
visit Progressivegrocer.com/shopperloyalty.
Card-carrying Shoppers
Inmar’s most recent “Shopper Behavior Study” found that
nearly two out of three grocery shoppers (62 percent)
consider the availability of a store loyalty card program an
important or very important factor in determining where
they shop.
“Despite their channel fluidity, shoppers are looking to be
rewarded for their purchases,” says Trey Moser, senior director
of retail analytics at Winston-Salem, N.C.-based Inmar.
Highlights of the study include the following:
81 percent of shoppers participate in at least one grocery
store loyalty program, and 65 percent participate in a non-
grocery store loyalty program.
40 percent of shoppers who reported using more coupons
said they did so because they were able to load offers onto
their store loyalty cards.
Shoppers who regularly use coupons loaded to their store
loyalty cards shop more and spend more in the grocery
channel than shoppers who don’t regularly engage with
load-to-card coupons.
72 percent of shoppers with children in their households
want coupons loaded to their store loyalty cards for prod-
ucts that they normally buy; 64 percent of shoppers without
children at home say the same.
—John Karolefski
Heckman, the consultant, enthuses that
“shopping technology” is exploding. Shoppers
want automation, simplicity and consolidation of
the many ofers and rewards from each retailer.
Consequently, he says, loyalty cards are gradually
giving way to shopping apps, wireless chips and
other technologies that identify the shopper both
online and in the store.
“Technology has fnally arrived to deliver on the
promised returns of loyalty marketing,” he explains.
“It is now up to the retailer to either embrace a new
model of holistic, technology-based loyalty or run
the risk of being rendered irrelevant, even to their
most loyal shoppers.”
Trey Moser, senior director of retail analytics at
Winston-Salem, N.C.-based Inmar, agrees, saying
that maintaining shopper loyalty requires more
than just a shopper card program. “An engaging,
data-guided program that encourages and rewards
purchases should be at the center of every grocery
retailer’s CRM strategy,” advises Moser. “Some
retailers have chosen to refocus marketing eforts
elsewhere, but those who have continued to invest
in their loyalty programs — and are now leverag-
ing new personalization and targeting capabilities
— are seeing real return on that investment.” PG
Technology has
finally arrived
to deliver on
the promised
returns of loyalty
marketing. It is
now up to the
retailer to either
embrace a new
model of holistic,
technology-
based loyalty or
run the risk of
being rendered
irrelevant, even
to their most loyal
shoppers.”
Mark Heckman, former
VP of marketing,
Marsh Supermarkets