Loyalty Cards May Cost More Than They Save

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Mar 29, 2002
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Consumers give up a degree of privacy for supermarket loyalty card programs, which don’t offer much in terms of dollars-and-cents savings when prices are compared with those of their major competitors, critics say. Kroger and other grocery chains use the cards to gather data on what shoppers buy. Besides a name, address and phone number that are requested on the application for a Plus Card, the company also keeps track of a customers’ purchases and method of payment.

A small national organization with a membership of about 1,200 opposes the cards. Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) has concerns about how the data that’s collected is being used. The cards pose a threat to those who value privacy, according to CASPIAN founder Katherine Albrecht.

Albrecht says her main reason for opposing the cards is that they don’t deliver on their promise: cutting prices at the cash register. “The supermarkets really tout these as discount programs as ways to save money. As you can see from a survey we did a year ago, prices went up and the sale prices were not as good after the cards went into effect,” she says. “When cards go into effect, the prices overall go up and the people who wind up funding the card programs are the 10 percent of the people who don’t scan their card for whatever reason.”

Moderator Comment: Do retailer loyalty programs provide
substantial savings to consumers with a card compared to non card-carrying shoppers?

The savings are there. The problem is that is just about
all that is there with loyalty programs woefully under utilized. [George
Anderson – Moderator
]

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