The 169-store Shaw's and Star Market grocery chain ended its loyalty-card program on Friday (June 28), according to Progressive Grocer.
The New England chain joins its sister grocers Albertsons, Jewel-Osco and Acme in going to a "card-free savings" approach. All of the chains were acquired by private equity firm Cerberus Capital Management in March, and all have shut down their loyalty programs since mid-June.
The move was predictable, since even before Cerberus bought the chains from Supervalu (NYSE:SVU), it had eliminated loyalty programs in the stores it already owned. Cerberus sources have said the firms grocers have never found much use for the CRM data it was collecting with the programs. If you're not using it to get useful CRM data, what's the point?
That, of course, is a matter of business philosophy. But it raises a real question: Have we reached "peak loyalty"? Some U.S. chains, such as Target (NYSE:TGT), have well-developed systems for mining CRM data to the level that they can identify individual customers who are pregnant, as a New York Times Magazine story described last year. But most retailers are sitting on mountains of CRM data they keep around because they might have a use for it someday.
Trouble is, that personally identifiable data is increasingly subject to state and federal law. It costs money to store and secure. And all it takes is one bright idea for using the data to get a chain in trouble. For example, a decade ago one chain was on the receiving end of a lawsuit after it used CRM data from its pharmacy to try upselling customers to name-brand drugs. That chain? A pre-Cerberus Albertsons.
Of course, it's possible that Cerberus's approach to loyalty programs isn't so much a business philosophy as a tactical decision. We'll get a chance to see if that's true if Cerberus is successful in its bid for the Harris Teeter (NYSE:HTSI) grocery chain, which was reported last week. Harris Teeter has a loyalty card too. If Cerberus gets the chain and kills that card, we'll have a trend.
- See this Progressive Grocer story
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