Johannesburg - Food retailer Pick n Pay beat its own drum yesterday, saying it led the pack in loyalty programmes.
Its Smart Shopper programme had more than 8 million members and recorded more than 20 swipes every second while Pick n Pay stores were open, the retailer said.
Retailers, banks, medical schemes, insurers and restaurants have over the years introduced many types of loyalty programmes.
Absa Investments retail analyst Chris Gilmour said the number of loyalty schemes had increased over the past year, with both consumers and retailers benefiting. He believed that while customers received points or rewards, service providers got to know their customers much better.
While a retailer such as Clicks, which introduced its Clicks ClubCard in 1996, has 4.3 million customers on its loyalty programme, Pick n Pay claims to add more than 25 000 customers a week.
Two years ago, Pick n Pay said it had invested R140 million in the loyalty card programme as part of its strategy to increase its customer base and boost sales.
At Pick n Pay, 1 000 points are worth R10 and can be switched for cash back on the card to be spent in its stores.
Steve Hoban, the head of the Smart Shopper programme at Pick n Pay, said: “Smart Shopper currently accounts for 65 percent of Pick n Pay sales and 43 percent of baskets, and has given customers well over R1 billion back in points since its inception.”
Pick n Pay said that through Smart Shopper, sales participation went up 3.3 percent in the 52 weeks to March, while voucher redemption was four times higher than last year.
Gilmour said that although Pick n Pay’s loyalty scheme had been a success, it had not really increased the retailer’s market share. The card had merely managed to arrest the decline in market share.
“It could be argued both ways. Firstly by saying ‘yes it has made a huge difference because if they had not had it then they would have been in big trouble’. Again, it has not made a huge impact.”
Pick n Pay’s market was growing more slowly than the market generally. “The acid test would be: has the loyalty programme been that effective in maintaining market share? Unfortunately, not in Pick n Pay’s case,” Gilmour said.
Hoban said members of the Smart Shopper programme generally shopped more frequently and spent more per visit. He added that customers on the programme took advantage of the savings offered.
“We have seen Smart Shoppers spending more of their points in the week before pay day to help them when money is tight and again in January when lots of customers have run out of cash.”
Gilmour said it had been a very successful project, but it was competing with a lot of other loyalty programmes. “Everyone has jumped onto the bandwagon, trying to get people tied into loyalty programmes.”
In the longer term, Gilmour said, loyalty schemes should help retailers with their stock management systems.
“This will help retailers monitor what is selling or what is not selling and will help them minimise their stock procedures,” he noted.
Gilmour did not believe the loyalty programme at Woolworths had been as successful as Pick n Pay’s.
Woolworths’s WRewards programme has 3 million members. Woolworths said its members saved almost R2 million every week.
The latest retailer to join in is Edcon, which introduced its Thank U card in 2012. Thank U cardholders number well over 10 million.
Edcon owns Edgars, CNA, Jet and Boardmans and has upped the game by offering customers 10 points for every R1 spent, although 1 000 points is equal to R1 back.
Pick n Pay’s shares declined 1.46 percent to close at R58.24 on the JSE yesterday. - Business Report