Tesco Sees Green in Loyalty Program

Discussion
Aug 04, 2006
George Anderson

By George Anderson


Forget about a couple of pence off for using your own bag instead of the store’s when you shop at Tesco.


The largest grocery chain in the U.K, is looking to reduce the amount of plastic bags it uses by giving customers a Clubcard program point for every bag they bring and fill with
groceries. Under ordinary circumstances, Tesco awards Clubcard points at a rate of one for every £1 spent.


The latest move by Tesco, according to a report by The Guardian, is another in a series within the U.K. market where retailers try to outdo one another in a bid to be
seen as “green” grocers.


In May, Tesco committed itself to reducing the number of bags it uses by 25 percent over the next two years. The company also announced all its bags would be biodegradable beginning
in September.


Tesco chief executive, Sir Terry Leahy, said, “We have had a team looking at carrier bags, trialing different ideas in our stores and talking to customers about what we could
do to encourage them to use fewer bags and to recycle the ones they do use. We have to move the emphasis away from trying to force change and onto rewarding positive behavior.
In other words, a more carrot than stick approach.”


Tesco will begin its public push for shoppers to bring their own bags to the store on August 14 with a series of television commercials.


Discussion Question: What is your reaction to Tesco linking loyalty card program rewards to customers bringing their own bags to the store? Do you see
this element of Tesco’s loyalty card program being adopted by other retailers?

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10 Comments on "Tesco Sees Green in Loyalty Program"


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Shaun Bossons
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Shaun Bossons
14 years 6 months ago

It almost goes without saying that Tesco has the strongest loyalty reward program in Grocery and this is further evidence of its use.

Due to the domination that Tesco now has in the UK market, they are always trying to win over local neighborhood markets and this is further evidence of them trying to give something back. They have had many worthwhile strategies in recent years, including the highly successful “Computers for Schools” program; it’s key for them to gain positive placement in the thoughts of the community, when often seen as the large company that takes business from local companies.

You can guarantee that Tesco will employ their reward structure as they roll-out stores on the West Coast. I suggest strongly that any of the retailers in that area and across the US start to do something similar…and quickly.

Ben Ball
Guest
14 years 6 months ago
This issue, characterized as “sustainability,” was the focus of the U.N. sponsored “Design Science Lab” held in Asheville, N.C. last week. I was fortunate to be in the area and get invited to the presentation of results from the 10 day conference. My key takeaways from the session were: 1) if you can see it you can understand it, and 2) if you can understand it you can fix it. These “Lab’s” are governed by Buckminster Fuller’s principles of “design science” which require that solutions utilize existing technologies, include a cost estimate and identify a potential and logical source of funding. Pretty pragmatic stuff for a university setting full of “save the world” types. But it made for some compelling learning. Not the least of which is that the solution to many of our most pressing problems is most likely a collection of incremental steps. For example, fluorescent vs. incandescent light bulb use. To get to the point on Tesco, moves like this can have a significant positive impact on consumer’s image of the retailer.… Read more »
Phyllis Palmer
Guest
Phyllis Palmer
14 years 6 months ago

Costco NEVER uses bags and recycles its boxes. My local Trader Joe’s gives away $10.00 worth of groceries weekly in each store in a raffel where you get to enter each time you bring your own bags when you buy groceries. It’s VERY successful. I think that it’s time for ideas like this…especially if Tesco has more of an “upscale” appeal, this kind of shopper will “recycle.”

James Tenser
Guest
14 years 6 months ago

Bikechick’s post above is worth a second look. The raffle at her local TJ’s is an example of a really positive, simple practice that will yield large quantities of good will. Thanks for sharing that one.

As far as Tesco is concerned, I believe it understands that many of its customers want to feel good about making small, daily efforts that help preserve the health of the planet. Reusing plastic sacks has multiple benefits – petroleum saved, landfills less clogged, fewer sea turtles strangled.

Responsible, sustainable business practices that align the firm with the goals and ethics of the community are to be commended and emulated. The loyalty points merely underscore the real point – Tesco cares enough to kick in its fair share.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
14 years 6 months ago

How many bags do you take along? I never know how many bags I’ll fill, and what if I need six and only brought five? Of course, Tesco will give me one to save the sale, but will I still get my loyalty card reward? Will customers bringing along too few bags limit their purchases? And depending on the type of bag I use, won’t they eventually wear out and I’ll have to resupply from Tesco? What if I stuff a bottle of wine for tonight’s dinner into (my) weak bag and it breaks open on the way to the parking lot — will Tesco replace the wine? What about the myriad uses I have for grocery bags around the house, from trashcan liners to doggie defecation disposal containers?

Keep the points, I like the bags.

Bhupesh Shah
Guest
Bhupesh Shah
14 years 6 months ago

In Canada, there have been a number of “discount” grocery chains like No Frills and Price Chopper that claim to have lower prices due to reduced operating costs. They charge customers for plastic bags and also provide empty boxes/cartons for customers to use in lieu of bags. This increases their margin in two ways:

1. Plastic bags offer an incremental sales opportunity.

2. Empty boxes/cartons have to be disposed of. This involves break down/crushing and then paying someone to haul it away. By having the customer use these instead, they reduce the amount to be disposed.

Costco figured this out years ago!

Tesco has been known as an innovator in this channel. I’m sure they can use this data to tailor specific offerings to those customers that choose to be environmentally responsible and fiscally prudent!

Bernice Hurst
Guest
14 years 6 months ago
Slow down, folks, this isn’t a bad initiative by any means but it really isn’t quite as wonderful as Tesco’s PR machine has convinced you it is. First, there are other supermarkets here (notably the dreaded Asda and, of course, Waitrose) who sell “bags for life.” These are sturdier plastic carrier bags, cost a few pence only and are replaced, free of charge, when they wear out after however many times the customer uses them. Second, Terry Leahy says customers want plastic bags rather than boxes if they walk to the stores. I can’t give you a precise number but if you just think about what you know about Tesco locations, you will realise that only the tiniest minority of customers actually walk. Third, he was asked this morning whether their home delivery service would start packing more than the usual 1-2 items into each plastic bag to cut down and he waffled on about how they had to think about that one for a while longer. Think about it? No brainer or what? Finally… Read more »
Karin Miller
Guest
Karin Miller
14 years 6 months ago

Customers will understand that the value to Tesco of £1 spent is greater than that of a returned plastic bag. Assuming that the loyalty points are worth having, customers will perceive the additional points as a benefit to them, and the policy as goodwill on the part of Tesco.

Carol Christison
Guest
Carol Christison
14 years 6 months ago

It’s a numbers game with the retailer, the consumer, and the environment all winning. The retailer creates a positive image and reduces costs, the consumer gains redeemable points and feels good about helping the environment, the environment wins because fewer trees are harvested for bags and you don’t have the costs of recycling. The test of time will show if the savings translate to real dollars. If it does, it will be one more tool with a competitive advantage and other retailers will follow suit. Club stores have already done away with packaging and consumers adjusted just fine.

Mark Lilien
Guest
14 years 6 months ago

For about 10 years, there was a retailer in Massachusetts, Spag’s, whose slogan was “No bags at Spag’s.” You had to bring your own bags or use their leftover cardboard boxes, when they had them. Huge oil price increases are driving plastic bag price increases, so any retailer with a loyalty card would benefit by copying Tesco’s idea. And why not sell reusable carriers, like IKEA does?

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