Journal Gets Cranky with Grocery Discount Cards

Discussion
Jan 22, 2003
George Anderson

By George Anderson


An article by The Wall Street Journal’s (hardly a bastion of the liberal media) Katy McLaughlin concludes that stores that distribute club cards are more expensive for consumers than those that do not.


Ms. McLaughlin shopped at stores in five different markets (Atlanta, Brooklyn, Chicago, Dallas and San Francisco). In each she went to a store that offered a card and another, nearby, that did not. She reports “In all five of our comparisons, we wound up spending less money in a supermarket that doesn’t offer a card, in one case 29% less.”


This does not mean that club cards are bad for the bottom line, however. Ms. McLaughlin writes, “About 10% of shoppers at card stores don’t use the cards, so they pay full price for things that are actually on sale. That is a windfall for stores because of the way grocery discounting works: Manufacturers — not stores — provide most discounts; the stores just pass along the savings. So, if you are paying full price for an item the store got at a discount, the store can pocket the difference.”


Moderator’s Comment: Are consumer press reports accurately
portraying the benefits and shortcomings of existing card programs? Will the
negative press reports on membership cards affect their use by consumers or
retailers?

[George
Anderson – Moderator
]

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