Why do I need a club card to qualify for sale prices at the grocery store?
June 1, 2005 10:05 AM   Subscribe

Why do I need a club card to qualify for sale prices at the grocery store?

It seems like this started about 6 or 7 years ago and by now it seems like most of us have half a dozen grocery store cards on our keychains or in our wallets. But what does the grocery store get out of this? Are they tracking our purchases and spending habits? Who would care about that? Are they just selling our contact information to junk mailers and telemarketers? Are they doing something else that's so evil I haven't even been able to think of it?

Also, does anyone know when and where this phenomenon began?
posted by subclub to Shopping (41 answers total)
Yes, you are getting a discount because you are giving them details about your buying habits for their marketing. They use it to help determine what products to push at what times and to what people. For example, if you always buy kleenex tissue, 76% of other kleenex tissue buyers also bought Ben & Jerry's. They will give you a coupon for $0.20 off a purchase of a pint, etc.

They may or may not sell your address to marketers, but it really is important for their own business and understanding their own market demographics better. You just have to decide if getting a few % off your purchases is worth the intrusion. Me, I think it's worth it.
posted by qwip at 10:15 AM on June 1, 2005

They use the marketing data from you signing up to make targetted mailing lists which the corporate parent company uses to fine-tune demographic data for new and current stores.

Some stores also sell information back to the manufacturer and to noncompetitive local retailers and mail-order houses, based upon your purchases.
posted by Fuka at 10:16 AM on June 1, 2005

I'd say yes, they're tracking your spending habits, and depending on the store, they also might be selling your name and address.

You realize you don't have to give them your real name and address information, don't you?
posted by SteveInMaine at 10:16 AM on June 1, 2005

They are tracking purchasing and spending habits, which helps them tune promotions to their customer base. You'd need to read your "club" app to see if they promise not to sell your info. If they don't promise not to, they probably do.

To your larger point, savings clubs are actually part of a larger phenomena that has been a way for retailers to raise prices while still attracting customers with low prices. The key is that you have to work harder for the lower price (fill out the rebate, show up for the Best Buy 6 a.m. opening, join the supermarket savings club, do the pricematching). Those who are motivated pay less, and that money comes right out of the pocket of those who aren't motivated. (Only about 40% of customers redeem the rebates they're entitled to.). And the retailer increases gross profit because he's calculated what % of customers will do the work of savings and what % won't, and he's tuned his promotions and pricing accordingly.
posted by stupidsexyFlanders at 10:20 AM on June 1, 2005

Some markets do not require identification to obtain a card. (Giant does not require ID, Safeway does.) I would suggest getting a card from a market with a the non-intrusive policy if you feel uncomfortable.
posted by Morrigan at 10:22 AM on June 1, 2005

Response by poster: qwip & Morrigan: the club card savings is definitely worth it for me. i'm not really worried about my adult diaper purchases ending up on someone's spreadsheet, just curious about how and why this whole thing started.

SteveInMaine: i always give a fake phone number, but i don't mind the junk mail.
posted by subclub at 10:26 AM on June 1, 2005

I've heard that safeway, in particular, makes nearly no margin on their generic safeway-branded items because they can make it all back from selling the data from the cards (the generic items are the ones most frequently discounted by the cards).
posted by juv3nal at 10:28 AM on June 1, 2005

Supermarket discount cards are a fantastic way for grocery stores to track your spending habits. Chains mine the information for purchasing habits, and use the information to determine elasticity of goods. If they can jack up the price by a few cents without lowering demand, they're going to do it. Additionally, those "bonus buys" you get with your card aren't really "bonus buys." The original prices have been raised to make the deals seem that much better. In fact, you can often get better deals elsewhere, without a card.

This information is good for them (better targeted advertising, stocking, etc), and good for whomever they sell the information to. Grocery store margins are pretty small, so the $$ saved can be pretty significant.

Additionally, it allows stores to differentiate between groups of customers: those who are willing to put in some extra effort for a lower price (smaller #), and those who are unwilling to go through the effort, and thus pay more (majority of folks). Coupons work the same way.

(on preview: already been said.)
posted by asnowballschance at 10:30 AM on June 1, 2005

They are tracking your purchases and spending habits for their own marketing purposes. Knowing what subclub, the real person, buys individually isn't of much import to anyone at the store, and no one's sitting at their desk going "hmm, I wonder what subclub bought last week". But knowing what people similar to you buy as a group is very valuable. Retailers can more narrowly tailor marketing campaigns by analyzing purchasing trends. If they see that people who spend $200+ a week on groceries all buy Super Premium Spam, they'll offer a big discount on that to bring more big spenders like that in. They'll also use purchase data to negotiate with suppliers on promotional money and slotting fees.

In the reverse, they'll do analyses that identify groups of profitable customers and send coupons to people moving out of that group.

So, generally the data is aggregated, analyzed at the aggregate, and used at the aggregate level (as in deciding what to advertise or put on sale) or acted upon at the individual level based on individuals falling into identified groups (such as sending you coupons or printing out coupons for you when you check out.
posted by dchase at 10:35 AM on June 1, 2005

I think there is another side to it, which is that these stores have 2 prices for some products: 1 for people that care what they are paying, another for the rest of the people that don't care. In otherwords, this is way of having the best of both worlds--you offer discounted prices to all consumers, but a certain percent of people don't care enough to take advantage. and those people pay more.
posted by alkupe at 10:39 AM on June 1, 2005

In every grocery store I've been to in recent memory, I've found that I do *NOT* have to have a club card in my (real/fictitous) name in order to receive the discounts.

When the cashier asks me if I have a card, I simply reply with "No I don't, do you have a card you can scan for me?" and they usually pull one out of their pocket or the register and scan it. At worst it takes a few seconds for them to get a card from another cashier or the manager.

I don't have any links, but I believe that it is now illegal for a grocery store to deny you the "club pricing" if you don't have one of their cards and request the discount.
posted by de void at 10:46 AM on June 1, 2005

At my local Jewel's, the cashiers will usually swipe their own cards if a shopper doesn't have thiers.

You can also mess with the marketers' heads, a la cockeyed.
posted by hydrophonic at 10:47 AM on June 1, 2005

I shop at Albertson's (supermarket) with a club card and someone told me that even though I didn't give any personal info (they don't require it), that they can find that data through my credit card? Do any of y'all know if that's true?
posted by superkim at 10:49 AM on June 1, 2005

ACTUALLY ... yes, they record the data. Yes, they pass the raw data on to their partners and the companies that they buy things from, and THOSE companies do things with the data. (One of the big reasons that -every- retailer has one of those damned things now.) However, very few retailers themselves actually do anything serious with the data. The data's hideously dirty anyway (my cards are all in the name of 110 year old ladies that live downtown in the hippest part of town with the last name 'Smith' for instance) and and doesn't really do much for the retailer except for acting as a leverage item during price negotiations with their sources. I have a degree in food industry retail management, by the way.
posted by SpecialK at 10:54 AM on June 1, 2005

It's all already been said as far as them tracking your purchases and marketing, etc. I'm offering an alternative - shop at Trader Joe's if you have one near you. The prices are consistently lower with no "club card" necessary, the food is better (IMNSHO) and they have a guarantee - if you try something new and you don't like it, you can bring it back for a full refund. Try that at Safeway and be sure to take pictures of the look the checkout clerk gives you. It took me a few trips to sort it all out, but once I got used to the different store, I find I much prefer it. No, I don't work at nor am I affiliated in any way with Trader Joe's - I just like them that much, and am going to miss them when I move to KC.

I hate the thought of giving a supermarket information just to get the optimum price; it's a scam, and even if they never sell the info, it just bugs. As far as linking up credit card info to get personal info - I couldn't say. My understanding is that your purchases are tracked through the number or bar code on the club card; if you give them false information, or use your mom's card as I did for many years, any mailings would go to whatever information was given (if required and/or provided). Otherwise, you may just get printed coupons geared toward your purchase each trip or based on your trends; sometimes you'll get competing brand coupons, I guess to entice you to Ben & Jerry's if you typically buy Haagen Dasz. I just find the idea distasteful in general and avoid it if i can.
posted by jennaratrix at 10:54 AM on June 1, 2005

FWIW, Trader Joe's isn't always (or usually, I think) cheaper in my locale. The key to cheap shopping is to clip coupons, keep a price log, and stock up on sales (good ones, anyway) and loss leaders.

obOT: It's becoming increasingly more common for people to in essence pay you for information about you, in this and other areas.
posted by RikiTikiTavi at 11:28 AM on June 1, 2005

Besides giving you coupons for other things that the store thinks you might buy, they also use the data to figure out what placement in the store helps an item sell the best. So they can see if an item will sell better if its at eye level on an endcap display or with other items of its type in one of the aisles. I suspect this is why you can often find the pre-cooked bacon next to the tomatoes now. Someone analyzed some numbers and realized people would buy more bacon if it was where the other fixings for BLTs were.
posted by MsMolly at 11:31 AM on June 1, 2005

I second the Trader joe's recommendation (though it is outside the scope of the question). It can actually be quite a bit cheaper than the large chains and has some great food. Also, store content varies somewhat by region.

In terms of the chain stores and their discount cards, I have several of those cards and I am aware that they are tracking my purchases. Or rather, they are tracking the purchases of Victor Hugo of 742 Evergreen Terrace.
posted by Verdant at 11:33 AM on June 1, 2005

Wegmans, in the western NY area, has had the cards for more than a decade. They also use them for good, though. If someone used real info when signing up for the card they'll be notified by mail if something they bought has been recalled.
posted by Kellydamnit at 11:35 AM on June 1, 2005

Response by poster: i actually just moved to california last year and i've found trader joe's to be a great place to shop (and i was surprised at how low their prices actually were). unfortunately they don't carry my particular brand of adult diapers.
posted by subclub at 11:35 AM on June 1, 2005

Best answer: All of this has been said already in the thread, but I wanted to quickly point out that there are many different uses for club cards, with various degrees of nefariousness attached to them:

(as a slight qualifier of background, I once took a graduate computer science class in data mining, which focused heavily on data collected from grocery store type places)

1) Help stores figure out what is selling and when. The data is aggregated together, to obtain results like "people sure do buy a lot of milk between the hours of 5 and 7 pm, when they head home from work". No personal information is recorded. Club cards are not required for this scenario, since everyone just scans barcodes anyway. This data is used to time promotions, store displays, and what have you.

2) Help stores figure out what groups of products are selling together. The data is primarily used to position things close together, beyond where it makes obvious sense. If the store had reliable data saying that 1999 Australian Merlot and 1 lb tub of cottage cheese is consistently a winning combo, the store would position the wine and dairy departments next to each other in a heart beat, to increase the chances of an aggregate purchase. As in the previous example, computerized terminals + consistent barcode scanning obliviates the need for club cards to get the data.

3) Help stores figure out what groups of products are selling together, and to whom. Now things are getting interesting, and the uses for club cards come out. The transactional data is correlated to aggregated personal data from club card registrations. If the old adage of "men between 25 and 40 tend to purchase beer and diapers" together really holds, the store will (a) confirm that such is the case; and (b) rack their brains as to what else might appeal to men between the ages of 25 and 40 who have young children, and position it next to both beer and diapers. You can't do this without (presumably true) personal data associated with cards. Nobody is making any illusions about the data being faithful 100% of the time, so any derived trend has to be highly demonstrable to be taken seriously.

4) Help stores figure out what individual consumers prefer. The next step in data mining. This is the example where you go to your favorite chain store and buy a pint of ice cream, and the back of your receipt has a coupon for 50 cents off a 12 pack of bagels. Why? Because the store knows that you personally like to buy bagels, and they want to entice you to come back, most likely because they also know that when you buy bagels, you go on a serious grocery shopping spree and leave with $50 worth of stuff. 50 cent discount well-spent, especially since you probably will lose the coupon at some point anyway.

5) Miscellaneous advanced evilness. This is where the personal data from your registration is sold wholesale to 3rd parties, with or without accompanying purchase history (with is obviously going to net more money, but there are legal privacy and social PR issues here, and a company must tread lightly). If you have a personally identifiable discount card, next time you get a big fat valupak envlope in the mail, rest assured that some of that data came from your shopping history. Whether that's really bad or not bad at all depends on your personal opinions.
posted by blindcarboncopy at 11:47 AM on June 1, 2005 [1 favorite]

nerdfilter: or, *sigh* i do hate to admit it, but you can use a handy PDA app. Like this one. I do like it, and it helps keep track o' my biz.
posted by indiebass at 12:02 PM on June 1, 2005

I don't know why tracking of personal habits has so many up in arms. Resistance is futile, you will be assimilated.

For some reason I think that cockeyed link is hilarious.
posted by Carbolic at 12:14 PM on June 1, 2005

I read an article by some consumer's advocacy group not too long ago that indicated that in fact users of those shopper cards actually got the same effective price as shoppers of other stores that did not use those cards; the member sale prices simply replaced the sales previously offered and the end result was that if you didn't have one, you were notably penalized. Don't remember the link anymore I'm afraid...
posted by phearlez at 12:25 PM on June 1, 2005

It really comes down to linking customer demographics to sales or #3 on blindcarboncopy's post. Even without the club cards, sales and inventory data provides enough information on what sells, what doesn't, and what marketing/displays/promotions are working. Club cards take the next step and link the sales data to an individual with age, gender, geographic location, and personal contact info. That A-B connection is then used internally or sold.
posted by junesix at 12:30 PM on June 1, 2005

Most stores, if you're nice to the checkout person, will give you a new blank card to use, with the expectation that you might someday get around to filling out the details. So long as you don't ever fill out the details, everything is great - they get their purchasing-preference data (minus any identifiable information), you get your discounts, and everything goes swimmingly.

If anyone wanted, they could cross-reference the card to credit/debit/cheque details unless you always pay cash, but that would seem to be in the realm of exception circumstances. You don't get junk mail if you don't fill out the details.
posted by -harlequin- at 12:52 PM on June 1, 2005

I have gotten around Safeway's ID required policy every time I lose my card and need a new one.

I just wait until I'm paying and then, at the last second, ask for a card application. The harried cashier has always tossed a blank one at me, scanned the card, and instructed me to bring the completed application back on my next visit.

Which, of course, I do. Always.
posted by Sheppagus at 12:52 PM on June 1, 2005

The Husband used to work in grocery & will backup what phearlez said -- The cards mean the "sale" price is jacked up to regular price & regular price is jacked up even further, thus increasing the margins. Grocery margins are really slim, except on some notable products like alcohol (produce is pretty much always a loss). And of course they use the aggregate data to get better deals from their distributors... it always come back down to their bottom line, no savings really for the customers.
posted by susanbeeswax at 12:57 PM on June 1, 2005

One interesting factoid that I just remembered. A year or two ago, there was an incident here in WA, where a batch of tainted beef made it to shelves on local supermarkets. When this was discovered, naturally the product was pulled immediately. One of the chains used the club card data to contact consumers who purchased that kind of beef and tell them that it may be highly dangerous to use. Another chain had the same data and same problem, but didn't contact the consumers (probably because it never occurred to them) - they caught a lot of flac for it. Anyway, this is just to play devil's advocate and point out a valid, consumer beneficial use for personalized shopping cards.
posted by blindcarboncopy at 1:10 PM on June 1, 2005

Canadian Safeway (or BC Safeway, or perhaps just my local Safeway) allows me to use a phone number for ID.

So I give 'em a friend's phone number. She gets air miles, I get my discount, and we screw up the statistics.
posted by five fresh fish at 1:24 PM on June 1, 2005

produce is pretty much always a loss

If the groceries aren't making money on produce, and farmers aren't making money on produce, who the hell is making money on produce? Surely it can't be a loss all the way up the chain!
posted by five fresh fish at 1:26 PM on June 1, 2005

Don't know whether it's statewide or what, but here in western NC, the cashiers are really snotty about giving you a store card or their card to use if you don't have one or forgot yours. They say they can't do it, and if you say you have a card anyway, they want your phone number. If, like me, you used a fake number, you are kind of SOL at this point, unless the nice guy in line behind you hands you his.

Two separate supermarkets, Ingles & Bi-Lo, were used for this highly biased survey.
posted by mygothlaundry at 1:30 PM on June 1, 2005

I used to use the card at FJ when they had one. They had no personal information on the card other than a town (that was preprinted on the application when they opened the new store in town). The only information that my card gave them was that I read their sales flyer, and bought the things that were on sale, only rarely buying things that weren't on sale. A couple of years ago, they dropped their bonus club card, and there's only one chain that has a discount card.

I've shopped at a grocery chain in a different part of the state, and they've got cards at the register. If you don't have a card, the cashier will scan the register card. It's a small town, with a reasonable tourist level in the summer, and I think they use it to track what gets bought with what. I don't know if their corporate office thinks it's acceptable, but it's OK with the regional manager.

There's a new wrinkle in the club cards though. The community rewards card. The shopper doesn't get a discount, but a designated recipient gets some % of the total purchase donated to them.

bcc: if the coupon is preprinted on the back of the register receipt, it's not targeted to the order on the front of the receipt. I get dry cleaner and pizza coupons on the back of my register receipts. The coupons that are printed out at the register are (usually) related only to the current order, and don't change if you're using a club or rewards card. (The ones that give you coupons for Friskies cat treats if you bought cat food, or on your next 3 boxes of cereal, for example.)
posted by jlkr at 2:35 PM on June 1, 2005

They're called loyalty cards for a reason. Using the card to get a discount makes you more likely to shop there.

I was on a marketing panel where this was one of the issues. Everybody was vehement about hating them, and Hannaford still hasn't implemented them; I think they were the ones doing the marketing study. When I shop at a place that uses them, I ask for a guest card, or I fill out a new form with fake info every visit.
posted by theora55 at 2:57 PM on June 1, 2005

jlkr: you are right that usually the coupon on the back of card is not related to your profile, or often even your current purchase. This is definitely the direction things are moving towards, though. Right now it's a technological problem - it's a lot easier to dump aggregated data into a database and run reports once a month than having the database available to the POS register and have the queries execute in real time. That's nothing that can't be solved by the store in the next major infrastructure upgrade,a dn the incentive is strong... so it'll get there eventually.
posted by blindcarboncopy at 3:43 PM on June 1, 2005

>what does the grocery store get out of this?

It is an attempt to generate revenue. Nothing more or less.

>Are they tracking our purchases
>and spending habits?

If they want to, yes.

>Who would care about that?

A considerable number of companies and agencies. Right now the data is being collected, but we don't hear much about it being sold. Selling it would generate revenue so we have to assume that once they can, they will. Some potential examples might be:

Department of Social Services.
Insurance companies.
Marketers of every kind.
State and federal tax agencies.
Local police.
Lawyers looking for a nice stick to beat you with.

>Are they just selling
>our contact information to junk
>mailers and telemarketers?

You don't know. Once they have the data they can do what they please with it. In Europe you would have rights concerning the data, in The States you don't.

If the ReallyBigInsuranceCo,LTD wants to quietly cut a deal with the ReallyBigGroceryCo, LTD to start mining info on what their mutual customers are doing, and quietly drop customers who do something they don't like, or raise your premiums a dollar every time you buy another case of beer, or start excluding conditions that you show any interest in, they can.

>Are they doing something else
>that's so evil I haven't even
>been able to think of it?

Your question reminds me of a cartoon that was in The New Yorker:

Sales clerk looks at register, says to shopper, "Ma'm, what with your blood pressure, do you think you'd like to try some of our low-salt products?"

> superkim :
> I shop at Albertson's (supermarket) with a
> club card and someone
> told me that even though I didn't give any
> personal info (they don't require it), that they
> can find that data through my credit card?
> Do any of y'all know if that's true?

If you use that loyalty card with a check or credit card they can easily link the two items together. If you pay cash then it doesn't link to your name.
posted by Ken McE at 4:01 PM on June 1, 2005

They do track the purchases and keep them on record associated with your name. A few years ago in California purchase information from a Von's Club card was used as evidence in a murder trial (the defendant had purchased a rose and used her club card; rose petals were found scattered around her husband's body, militating against her theory of suicide).
posted by amber_dale at 4:03 PM on June 1, 2005

The example often given to explain the kind of things stores do with loyalty cards is "if they know you frequently buy bagels, they will give you a coupon for bagels to keep you coming back." However, they already know you're coming back and they already know you're buying bagels. If you're buying the same kind each time you're probably happy. There's no reason to give you a discount. What they are more likely to do is look at your overall grocery bill, see what kinds of things you like to buy, and if you are a big spender, they will enhance the selection of high-margin items of types that you like to buy. For example if you buy a different kind of bread every time you visit, and they don't carry very many different kinds of bread, and you are a highly profitable customer, and a lot of other highly profitable customers have the same habit, they might increase the selection of breads. This will increase your loyalty, at least until another store does the same thing. You will find that this phenomenon is largely responsible for the explosion of wine, beer, and organic foods selection in most grocery stores over the past decade or so.

Another thing they can do is track your brand loyalty. For example they know I am loyal on approximately two items: ketchup (Heinz tastes like catsup; other brands do not, so I only buy Heinz) and laundry detergent (liquid Tide -- I found something that works, and detergent is expensive enough that I don't want to try something else only to find out it sucks and have to throw it away). Most other things I'll buy whatever's cheapest. If I find that a given store is often out of stock on products I am brand-loyal to, I'll start going elsewhere. Stores admittedly don't have to worry too much about me wandering because I'm only brand-conscious on two items, but I'm probably not typical. They'll make damn sure they have the brands that the most profitable shoppers demand in stock. Note that "the brands that the most profitable shoppers demand" are not necessarily the same brands as "the most popular brands."

That said, loyalty cards generate such an avalanche of data that I've heard some supermarkets have never actually been able to get anything useful out of it, and that a few have actually discontinued their loyalty cards or are seriously considering doing so.
posted by kindall at 4:24 PM on June 1, 2005

That said, loyalty cards generate such an avalanche of data that I've heard some supermarkets have never actually been able to get anything useful out of it, and that a few have actually discontinued their loyalty cards or are seriously considering doing so.

A local grocery chain recently discontinued their loyalty card. The card came out when I was in high school and I automatically hated it because it was called "The Values Card" -- and believe me, if you're a local West Michigan business, "values" does not mean getting value for money, it means "We are fundamentalist Christians".
posted by dagnyscott at 6:35 PM on June 1, 2005

Yeah, Safeway let's you use "your" phone number if you don't have your card with you. I think when I signed up for the card I used my work address and phone number. Seems I'm not the only one; when I'm in Oregon and give the number I come up as a guy from our accounting department, when I'm in Seattle I come up as a former product manager. It's all very The Bourne Identity when the cashier thanks me as Mr. So-and-So...
(had I a moustache, this is when I would twist it rakishly)
posted by blueberry at 9:48 AM on June 2, 2005

Yeah, Safeway thinks I'm someone named Denise when I use the phone number. I actually even filled out the form correctly, it just seems their system can't handle reusing phone numbers! In any case I've moved since I signed up and keep using the old phone number.

For QFC and Albertson's, I made (via photocopying) a single "card" that has my QFC barcode on one side and my Albertson's barcode on the other. "Laminated" it with packing tape and it works just fine and is much less bulky than carrying around two cards.
posted by kindall at 8:55 PM on June 10, 2005

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