What?! No More Loyalty Card?

Jewel-Osco, the Chicago-area supermarket chain, has done something revolutionary and, some people think, downright crazy.  In late June, the company discontinued its preferred customer card.  Most other stores are still offering various benefits via cards.  Why did Jewel make this decision?  Will it benefit customers or serve them less well?  Will Jewel profit from the new marketing approach?  Jewel was a pioneer in the establishment of this trend 20 years ago.  Will it now be a leader in its demise?

The benefits of cards for customers:

In late June, when Jewel made its startling announcement that customers could discard their cards or turn them in to participate in a raffle, consumers were shocked. We'd all gotten used to watching the cost of our groceries go down in response to the insertion of our card, been pleased to have the gas discount, and adjusted our shopping lists in response to sales announcements online.

As I cut my husband's Jewel card in half, I wondered if Jewel carefully considered whether customers would really prefer this change. Yes, I know some groused about the invasion of privacy. I was happy to enjoy the benefits.  I think the person who wants to keep any particular purchase a secret can simply buy that item without using the card--or buy the embarrassing item in a store that doesn't issue cards or one where they don't have one.  As for the rest of the groceries, I don't care who knows what brands of milk or type of bread I buy. 

Are the price savings real?  Chicago Tribune columnist Eric Zorn brings up an interesting question that he doesn't answer when he says that the use of these discount cards is such an everyday transaction at so many stores that he's ceased wondering "if,  as many critics claim,...the discounts are mostly an illusion created by inflated list prices."

Then there's the safety benefit, which I think was a great thing.  If any product I purchased (and perhaps stashed in my freezer) were later recalled for health reasons, the store would know I purchased it and could (and probably would) inform me of the recall. 

Will the change be good for Jewel?

Here's what the Chicago Tribune says:  "Discontinuing its Preferred Customer Card represents a bold shift toward everyday savings and storewide sales. It also cuts off a pipeline of data linked to the plastic, where individual purchase history is tracked and used to target offers and other incentives, an increasingly integral part of retailing in the digital age."

A Jewel spokesperson says, "We think every customer deserves the same price.  It's that simple." A Jewel flyer I picked up on July 24 screams in huge letters:  "Low prices every day.. card free savings...No card, no hassle...Everybody gets the same low price."  I never found the card to be a hassle.  However, my daughter finds the discount cards a colossal nuisance.  She's carrying around 3 supermarket cards, 2 for pet supply stores, and probably 1 or 2 for drugstores. Then there are the credit cards, debit cards, driver's license, and medical insurance cards that all of us have in our wallets.  A lot of wallet-searching is required to find the specific card needed in a particular store.  When I told my daughter about the new Jewel policy, she said, "I wish every store would do that."

This change was the decision of Jewel's new owners, Cerberus Capital Management, which bought a chain that was losing money and evidently felt that change was needed. 

The Jewel-Osco home page and store flyers advertise its weekly specials.  But other benefits have disappeared.  Gone is the coupon program that allowed card-holders to load Jewel coupons onto their loyalty card and redeem these at checkout.  Perhaps more important to customers, the discount on fuel, which gave card-holders 10¢ off per gallon at Shell gas stations, is gone. My Dominicks card continues to give me 20¢ off each gallon of gasoline if I spend $200 in the store within a month.  Guess which store I've been doing more of my shopping at lately.

Comments from our site's Advisory Board scientists:

I asked some of our Advisory Board scientists to comment on loyalty cards and this is what they had to say:

About recalls:

Food scientist Dr. Joe Regenstein: "The ability to notify customers about recalls is a powerful plus. The 'comfort' alone should make the card worthwhile."

About the privacy issue:

Dr. Regenstein: "I think cards have the downside of letting companies know too much about your purchasing habits, although if one doesn't always use the same chain, it is actually distorted data."

About card savings:

Food process engineer Dr. Timothy Bowser: "While on vacation, I noticed a lot of supermarkets with the identity cards that you mentioned. There were plenty of good deals on groceries advertised right at the shelf if you used your identity card. My wife told me not to worry about not having one, because the clerk at checkout would swipe his card to give us the discount. Sure enough, she was right. That made me wonder how important it was to have your own card!"

[Note: The use of the clerk's card also gives the clerk the discount benefits that the card-holding customer is entitled to! If a customer has forgotten or lost the card, some stores can simply put in the person's phone number and give him/her the discount anyway.]

Food scientist Dr. Karin Allen says of loyalty cards, "I think they're great.  Mine offers double and triple points.  Sometimes I get $25-$30 off my grocery purchase."

Are any stores in your part of the country discontinuing the use of the loyalty card?

How would you feel about losing your supermarket loyalty card?  Please comment.

Source(s):

Karin E. Allen, Ph.D., Utah State University, Dept. of Nutrition, Dietetics, and Food Sciences

Timothy J. Bowser, Ph.D., Oklahoma State University, Dept. of Biosystems and Agricultural Engineering

Joe Regenstein, Ph.D., Cornell University, Dept. of Food Science

articles.chicagotribune.com "Jewel abandons loyalty card trend it helped pioneer"

http://articles.chicagotribune.com/2013-06-29/business/ct-biz-0629-jewel-20130629_1_loyalty-balance-rewards-data

Zorn, Eric. "Will Jewel hope public favors cardless buying?"  Chicago Tribune, Commentary section, June 14, 2013.