IN RECENT years, British supermarkets have faced unprecedented competition from a new breed of deep-discount grocers, sending their revenues and profit margins tumbling. The once loyal customers of the big four supermarkets—Tesco, Sainsburys, Asda and Morrisons—have been lured away by the promise of lower prices at Aldi and Lidl, two discount chains from Germany. Now the big four have found themselves turning to an old friend to lure them back: loyalty cards.
Hoping that offering shoppers more money-off vouchers will help win them back from the German upstarts, Tesco announced in March that it was expanding its Clubcard loyalty scheme. Then, Morrisons, a chain that had hitherto shunned the use of such cards, launched its own pilot scheme at its petrol stations in May. Finally catching the store-card bug, on October 2nd it unveiled its new “Match & More” scheme, which gives customers money-off vouchers in return for doing their grocery shopping at Morrisons. In a swipe at Aldi and Lidl, "Match & More" members will get extra vouchers if the products they bought at Morrisons are available for less at the German discounters.
At first glance, the plan appears to be a smart move. The "Match & More" card will collect data on its customers' shopping habits, which will help the grocer aim future advertising campaigns or money-off vouchers at particular groups, as well as help the retailer's buying department judge future levels of demand for different products. And market research suggests that offering occasional freebies to regular shoppers is also a much cheaper way to retain them than with an untargeted advertising campaign. Customers also seem to like the idea too. Nearly 95% of Britons are members of one or more retail loyalty schemes, according to GI Insight, a market-research firm, and around nine out of ten have at least one supermarket loyalty card.
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