Grocery Club Cards Enter Diet Zone - Company Business and Marketing

Industry Standard, The, Feb 5, 2001 by Cynthia Flash

A new Web site wants to turn your grocery club card into a ticket to a better diet.

Loyalty card programs -- the supermarket's version of frequent-flier miles -- track every purchase a customer makes. The data helps the stores manage inventory and market directly to customers' buying patterns. In return, customers get member discounts.

Boston-based Smartmouth is now making that data available, along with personalized health advice and nutrition tips, on Smartmouth.com. The "Virtual Nutritionist" service debuted this month with its first supermarket chain partner, New England-based Stop & Shop.

Card holders type in their ID number, and their grocery purchases are rated according to nutritional value. Shoppers are then shown healthier choices. That's good for customer health, but potentially more expensive: Health food generally sells for higher margins, food industry analysts say.

Ed Porter, director of customer relationship marketing for Stop & Shop, says he wants to give his 4 million club-card members something they can't get elsewhere, and "to provide a good return for us." For its part, Smartmouth gets an undisclosed fee for every Stop & Shop cardholder who visits. To add to that revenue, the site might display ads and coupons for nonfood items.

Meanwhile, Smartmouth has drawn praise from privacy advocates by deleting each customer's name, address, phone number and Social Security number from its database. The user's card number is the only information identified.

Advocates such as Jason Catlett of Junkbusters likes the fact that Smartmouth users can see the data grocers have collected. However, its "opt out" feature (club-card holders need to ask to be removed from the program) should be changed to "opt in," says Andrew Shen of the Electronic Privacy Information Center.

Legal uncertainties remain. California, for example, bars supermarkets from gathering and sharing customer data. Smartmouth believes its service is legal in the Golden State, however, and will try to recruit grocery chains there.