Loyalty cards issued by retail commercial properties have been a familiar feature in the UK for many years. Today over 85% of households have at least one loyalty card but there are differences of opinion as to whether they offer genuine savings? At the same time there are concerns, expressed recently by the Economist, about the amount of data gathered via the cards and the ways in which this is used. So are customers getting value for money or are their loyalty cards giving too much away?
There is no doubt that loyalty schemes have been a great success for retailers. Within twelve months of the launch of the Tesco Clubcard in 1994, clubcard holders were spending nearly 30% more in Tesco and 16% less in Sainsbury’s which responded with its own scheme two years later. Other stores quickly followed suit with major high street retailers such as John Lewis and Boots introducing their own loyalty cards. Asda is now practically alone in being without a card. Turning this into a unique selling point the supermarket boasts; “No club card. No gimmicks. Just lower prices every day.” This is a reflection of the differing opinions concerning the benefits loyalty cards offer.
Research conducted by consumer groups has found that commercial properties operating loyalty schemes frequently mark-up their everyday prices to factor in the points being earned by card holders. In addition customers will often be tempted to make purchases they wouldn’t normally make to boost their points. On the other hand if card holders are aware of this and stick to their normal shopping habits, studies suggest, they can make savings from the points they have earned.
Customer retention and brand loyalty are not the only benefits loyalty cards offer to commercial properties. Usually consumers taking out a card will be asked for a certain amount of personal information and every time they use the card thereafter data relating to the purchases made will be added to this. In this way, retailers are able to build up a detailed picture of the customer. This has led to concerns about privacy and the potential of this information being shared without the customer’s knowledge.
This month, the Economist has added to the debate citing increasing evidence that the information gathered could be used to the detriment of the card holder. With many retail commercial properties now offering financial services like insurance, they argue, it’s easy to see how this could be the case. The Economist cites as an example a customer whose card shows he or she regularly visits the alcohol aisle. Now if this customer were to apply for motor insurance would this information result in an increased premium, they ask?
There is a differing in opinion regarding questions such as this. Some consumer advisors warn customers to bear in mind that the picture retailers may be building up and how this might be used. Others believe commercial properties are only interested in the information regarding their biggest spending customers. Simply remembering to tick the ‘do not share’ box should be enough to protect everyone else they suggest. But do you agree?
£64 Million Whiteley Retail Development