Although they may seem like another marketing ploy to attract new customers, there's more to those little plastic supermarket discount cards than most smart shoppers may think.
The cards - which often dangle from shoppers' key chains - not only offer immediate discounts but also future rewards, all the while instilling a sense of loyalty to the supermarket's customer base.
"In order to get the discount, you have to get a card," said Commerce Prof. William Kehoe, explaining the basic concept of the discount card: Without the special magnetized card, the customer loses out on store sales.
Besides bringing in new customers, the discount cards - or "loyalty cards" - also ensure that old customers will come back.
"Harris Teeter started its VIC program in February 1997 as a way to offer additional benefits to our loyal customers," Communications Manager of Harris Teeter Jessica Walter said.
In Charlottesville, almost every supermarket has a discount card program: the Very Important Customer (VIC) card at Harris Teeter, the Kroger Plus card, the Giant Bonus card and the MVP card at Food Lion supermarket.
For Kehoe, the card program "no longer differentiates the store."
Stores still can use the cards to track consumer behavior and develop a better understanding of who their customers are. "Hopefully, [these cards] will be used to better serve the consuming public," he said.
At the checkout line, the clerk will swipe the card into the store's computer system, store the customer's personal information and record the customer's purchases, automatically creating a profile.
The companies "are building a database," Kehoe said. "One way they use it is they are able to see what consumers buy and how frequently [they] buy it. This helps [stores] plan their inventory and study how consumers respond to certain price promotions."
Giant Food recently started its Bonus program and has over 20 business partners in on the deal. For example, when customers mention their Giant Bonus card at the Hair Cuttery, they can save a dollar on any retail product or save 15 percent off their stay at any Choice Hotels International.
"We spent over a year analyzing the thoughts and impressions of customers on" this incentive program, said Barry, vice president of public affairs for Giant Food. "We wanted to develop a different and unique card within the food industry and provide customers with significant benefits over the competition."
Last month, Kroger rewarded their customers who spent $50 or more in their last purchase with $5 gift certificates. If customers use the card, they can enter for giveaways, discounts and gift certificates.
According to Stewart Ashby, a manager at the Virginia Department of Consumer Affairs, there hasn't been any significant number of complaints from customers regarding discount cards.
Almost all stores now have a privacy policy on cards applications where they promise not to sell customers' information to any third parties. Although the issue of privacy at supermarkets may be a relatively new concept, California already has legislation underway to ensure customer privacy.
The Supermarket Club Disclosure Act of 1999, recently passed by the California Senate, would require card issuers to disclose how they use customers' personal information and give them the right to delete their data. Included in the Supermarket Privacy Act of 1999 is a proposal requiring supermarkets to provide written notice of their commitment to seek customer permission for the "collection, distribution, aggregation or marketing" of cardholder information.
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