by Barry Tadmore

Created on: April 02, 2010

These days every grocery store seems to have their own discount card.  Many people are naïve enough to believe that the stores are offering these discount cards out of the simple kindness in their hearts.  This isn’t the case.  If offering a discount card didn’t add to their profits, grocery stores wouldn’t make them a part of their business structure.  Here are some of the ways grocery stores use a discount card for more than just discounts:

EXCLUSIVITY – If a regular customer sees a box of cereal that is sold for $5.00 but then see that the price for discount card-holders is $3.00, that customer will notice that he/she could have saved $2.00 if they had a card.  Could the grocery store afford to sell that box of cereal for $3.00 to everyone?  Of course!  But they want people to sign up for and use their discount cards!

STORE LOYALTY – Statistics show that by becoming a member of the discount club at your local grocery store, your loyalty to that store will increase.  Grocery stores know all about this, which is why they advertise their discount cards so much. 

SMART MARKETING – Data is knowledge.  Knowledge is power.  Any grocery store for which you are a member of the discount club, there is a database with your purchasing habits.  Every time you use that discount card, your purchases are recorded in the database and the grocery store is able to learn more about you.  A business can’t market to a potential customer unless they know their customer.  By gathering this data, the grocery stores are able to market towards you in an individual way using your purchasing history as a guide.

For example, most grocery stores now have coupon printers at the check-out stands.  Once you’ve paid, coupons will spit out that you’ll be able to use on your upcoming shopping trips.  Have you ever looked at those coupons and wondered why they were for items that you buy frequently?  I used to buy a lot of baby food, so I would get a lot of baby-related coupons – diapers, baby food, etc. 

CUSTOMER TRACKING – Grocery stores don’t just track your purchasing history.  They also track the demographics.  Your database includes a lot of demographic information that you gave them when signing up for your discount card: Name, age, address, etc.  Using this information allows grocery stores to understand their demographic and who is shopping with them.  What is the average age?  What zip codes are people shopping from?  If more stores were to be built, where would it make the most sense based upon their customers’ addresses?  These questions, and many more, are able to be answered by their database of customers with discount card memberships.

Just remember that it’s all about marketing.  Grocery stores aren’t just going to give money back to you if it wasn’t a part of a bigger picture in an attempt for more profits.  Grocery stores are being smart and marketing well, and we’re getting good discounts at the same time.  It’s a win-win situation!

Learn more about this author, Barry Tadmore.
Click here to send this author comments or questions.