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A recent student research team at Boston University's College of Communication found that 86% of adults have at least one grocery store loyalty card while most have more than one. This makes grocery store loyalty cards more widespread than the Internet or the home computer. Yet nearly 50% of the people who carry grocery store loyalty cards were unaware of the sophisticated web of tracking and marketing they were getting stuck in when they signed up. In the online survey of 515 adult supermarket shoppers, the survey found that even with high privacy concerns, most cardholders felt that the benefits of using a loyalty card outweighed any infringement on personal privacy.
Grocery store loyalty cards are the credit card or key chain-sized cards with a bar code or magnetic stripe offered by most large supermarket chains. When scanned at the cash register, the card unlocks special discounts offered to members. In return for the savings, cardholders agree to allow the grocery store to track their purchases each time they shop. Grocery stores use this information to decide which products to carry, what prices to charge, and in some cases, to target consumers with specific coupons and promotions on behalf of grocery manufacturers.
Actual grocery store uses vary by store. Some grocery stores have found the data analysis is so time consuming they have abandon the loyalty cards altogether. Still others have sophisticated systems for matching publicly available information about consumer households with the data collected at the cash register, a practice that infuriates privacy advocacy groups.
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Over three-fourths of cardholders report that they use their grocery store loyalty card nearly every time they shop despite the fact that 52% also are concerned about how much of their personal information is collected by companies. Sixty-nine percent of consumers report that they use the card despite these privacy concerns because it benefits them in the form of lower prices and access to special promotions.
“The fact that consumers - even those generally concerned about privacy - are willing to use these cards is testament to the fact that personal information is a commodity people are willing to trade with the right company for the right price,” explains Professor James McQuivey, who supervised the research project. No doubt this will only embolden supermarkets as they try to squeeze ever more dollars from a thin-margin retailing environment. McQuivey sees this expanding in the future to even more sophisticated tracking of customer habits. “Expect radio frequency identification embedded in the loyalty card of the future, an electronic tag that will identify you when you walk through the door, when you're standing in front of the Pampers, and when you arrive at checkout. All with your permission, of course, and in exchange for a benefit grocery stores have yet to identify.”
Grocery store loyalty cards are the credit card or key chain-sized cards with a bar code or magnetic stripe offered by most large supermarket chains. When scanned at the cash register, the card unlocks special discounts offered to members. In return for the savings, cardholders agree to allow the grocery store to track their purchases each time they shop. Grocery stores use this information to decide which products to carry, what prices to charge, and in some cases, to target consumers with specific coupons and promotions on behalf of grocery manufacturers.
Actual grocery store uses vary by store. Some grocery stores have found the data analysis is so time consuming they have abandon the loyalty cards altogether. Still others have sophisticated systems for matching publicly available information about consumer households with the data collected at the cash register, a practice that infuriates privacy advocacy groups.
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Over three-fourths of cardholders report that they use their grocery store loyalty card nearly every time they shop despite the fact that 52% also are concerned about how much of their personal information is collected by companies. Sixty-nine percent of consumers report that they use the card despite these privacy concerns because it benefits them in the form of lower prices and access to special promotions.
“The fact that consumers - even those generally concerned about privacy - are willing to use these cards is testament to the fact that personal information is a commodity people are willing to trade with the right company for the right price,” explains Professor James McQuivey, who supervised the research project. No doubt this will only embolden supermarkets as they try to squeeze ever more dollars from a thin-margin retailing environment. McQuivey sees this expanding in the future to even more sophisticated tracking of customer habits. “Expect radio frequency identification embedded in the loyalty card of the future, an electronic tag that will identify you when you walk through the door, when you're standing in front of the Pampers, and when you arrive at checkout. All with your permission, of course, and in exchange for a benefit grocery stores have yet to identify.”
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