Supermarket loyalty - incentive and rewards programs are encouraging customer loyalty

American Demographics, Nov, 1997 by Marcia Magelonsky

Almost every retail and service industry seems to be offering some sort of incentive and rewards program to encourage customer loyalty. Supermarkets, however, have been slow to join in. Loyalty programs are currently offered by about 45 percent of grocery retailers across the country, according to the Washington, D.C. -based Food Marketing Institute (FMI). And only 35 percent of U.S. households belong to one or more supermarket loyalty programs, according to ACNielsen.

Yet consumers seem eager to take advantage of supermarket loyalty programs when they're available. Among shoppers with access to a frequent-shopper program, more than eight in ten use it at least once a month, says the FMI. Three-fourths of shoppers without loyalty programs say they would use them if they were available.

But frequent-shopper programs can be expensive to maintain, which is one reason smaller food retailers are often hesitant to establish them. "In order for a retailer to handle a frequent-shopper program successfully, he or she must be willing to have two or three full-time staffers to oversee it," says Christine Foschetti, vice president of marketing for Retail Resources of Lyndhurst, New Jersey, a company specializing in customized marketing programs.

The major reason consumers give for joining frequent-shopper programs is to take advantage of member specials (75 percent); 19 percent sign up because membership is required for check writing, according to ACNielsen. Those who join the programs use them-75 percent of members show their cards on every shopping trip.