business news in context, analysis with attitude

By Rick Ferguson,

News of the untimely death of loyalty programs in the grocery sector may be greatly exaggerated-- at least according to a study released by Paris, France-based CIES - The Food Business Forum. In their annual "Top of Mind" survey of 378 executives from food retailing and manufacturing firms in Europe, the Americas and the Asia-Pacific region, 64.3 percent of respondents cited loyalty and retention as being "top of mind," moving it up from the No. 3 spot a year ago.

But the survey also reveals a marked difference of opinion among food retailers on how to achieve desired loyalty and retention goals. One camp feels further investment in loyalty cards and programs is the right path, while the other camp emphasizes marketing the retailer as the brand (like Target in the U.S.), or on keeping prices low.

COLLOQUY, of course, is biased. But evidence continues to emerge that U.S. food retailers have seen the light and are in the process of dumping or revamping their two-tiered pricing strategies in favor of a renewed investment in long-term customer loyalty. The latest convert is New York-based A&P chain Food Emporium, which has replaced its discount-based Bonus Savings Club Card with a true loyalty card that rewards customers with Gold Points Rewards.

Gold Points Rewards is a fledgling national coalition program anchored by various subsidiaries of Carlson Marketing, including TGI Friday's and the various Radisson hotel brands. In exchange for joining the coalition, Food Emporium gains market exclusivity to issue Gold Points on supermarket purchases in the New York metro area market. Gold Points can be redeemed for savings on travel, restaurants, hotels, groceries, floral arrangements and additional merchandise.

According to the Food Emporium Web site, Cheryl Palmer, President of The Food Emporium, said, "We are committed to providing our customers with a valuable and innovative shopping experience. In this day and age, the customer has many different options in terms of where they choose to shop. One of the reasons we chose the Gold Points Rewards program is that it is a reflection of the type of customer that shops in our stores. At The Food Emporium, we strive to establish successful, long-term relationships with our customers, becoming their food retailer for life. The Gold Points Rewards program is one of the many ways we can make this happen."

The Food Emporium joins two other major New York area chains in offering its customers an exclusive Loyalty currency. Foodtown offers customers Greenpoints and Shop Rite offers Continental Onepass miles. Formation of this partnership was a smart move for Carlson, which desperately needs to break into the grocery market to increase the velocity of earning in Gold Points-- after all, how many times a month can you eat at TGI Friday's? But more importantly, Food Emporium has positioned itself as a player in what could prove a strong regional coalition model in the New York area. Which sounds more appealing to you-- being forced to use a discount card to get prices that you should be getting anyway, or earning points on all of your grocery purchases that you can redeem for a long dreamed-of family vacation? To us, it's a no-brainer. But then again, we are biased, so don't listen to us. Listen to your customers. If Food Emporium is on the right track, their customers will be the first to tell them.
KC's View:
This is the first of a regular series of columns about the subject of loyalty marketing from the folks at COLLOQUY and