Grocery discount cards are very useful on many levels. For consumers they offer savings or perceived savings on grocery items and this attracts many people to apply for a card, but for grocery stores, the value is so much more.
Those convenient and simple cards with the bar code are very helpful to grocery stores to gain a lot of insight and information about their customers and their buying habits. In fact their attributes are considered so valuable other kinds of stores have followed suit and have developed their own discount programs using cards or other similar approaches.
The bottom line is these discount cards offer more than just discounts to the customer. In fact the information gleaned from customers far pays for itself in terms of a return on investment.
While it is true businesses give customers a lower rate than they advertise which can cut in on their profits, the analysis and level of information that these cards provide are a tangible way to increase profitability and this outweighs the potential revenue lost from the discounts offered.
Here are some of the ways grocery stores use discount cards for more than just discounts:
*Information about Customers buying habits
With every swipe of a discount card a grocery store can ultimately see what consumers are buying, how often they purchase it, when they tend to buy and how much of each item they put in their carts per visit. The analysis reports generated from those discount cards provide a full scope of everything a grocery store wants to know about their customers and their buying habits.
*Tracking
In addition to individual purchases in a given timeframe or other designated criteria, grocery discount cards enable the store to track purchases over long periods of time. This helps them identify trends and gives them a birds' eye view of which products are successful, which are undesirable, and any other kind of tendencies shoppers exhibit. The ability to track purchases is a very powerful tool for both the short term and the long term.
*Notice Trends
The aforementioned trends are noted and this helps grocery stores identify ways to increase profitability and decide who to target with special promotions, coupons or simply see how much people are willing to pay for any given kind of item. Noting this quantity of demand is extremely useful to grocery stores.
*Evaluate Products
Watching consumer buying habits and trends also help grocery stores evaluate products; for instance if a specific product sits upon the shelf gathering dust, it is likely this item will be discontinued or ordered in far less quantity.
The grocery store may also determine which products are highly successful and then increase the amounts of these items ordered in an effort to attract more customers.
*Marketing/Advertising
All of the information taken from swipes of grocery discount cards can also be used towards marketing and advertising efforts. By knowing who buys which kinds of items, those coupons you get at the register are printed and the kinds of coupons you get are often no accident. These are carefully targeted by groceries and manufacturers in an effort to get you to either continue to buy a product or try a similar one if the discounts are attractive enough.
*Set Item Prices
Being able to see an overall analysis of how much/often customers are willing to buy items helps the grocery set prices. Those 'great savings' you see may actually be more aligned with manufacturer's suggested retail price with the card than the inflated price charged without a card.
Discount cards are extremely valuable to grocery stores. Consumers have to decide whether the tradeoff of sharing so much personal information is worth the savings. Statistics seem to indicate that most shoppers do indeed feel this tradeoff is worth the benefits.
Grocery stores have developed a great business tactic to attract customers to give up information they wouldn't otherwise share. Customers have to evaluate for themselves whether or not the privacy issues are important enough for them to gain the benefit of savings.
While it may be true some level of savings is made, if privacy is a concern, it might be worth your while to examine the prices at stores that do not offer discount cards but stick to traditional buy and sell relationships with no information exchanged. The results you find in terms of price may be astonishing as sometimes it's found there are no noticeable differences in savings at all. In some cases grocery discount cards are a win-win relationship, but in others, the benefits are more a one-way street.