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Is Walmart losing out on deeper loyalty by not offering loyalty cards?
- Annamaria Turano
Walmart remains one of the few giant retailers which does not yet offer a customer loyalty card. In the new book, Walmart: Key Insights and Practical Lessons from the World's Largest Retailer (Berg & Roberts, Kogan Page, 2012), the authors argue that retailers such as Kroger and Tesco leverage insights from loyalty cards to target, localize, and customize their product mix, thus achieving deeper loyalty. Walmart, in comparison, utilizes shopper surveys combined with Retail Link data in an attempt to gain similar insights.
The underlying question is: which approach is right? According to Jacob D. Furst, director of DePaul Information Assurance Center at DePaul University in Chicago on www.creditcards.com, "Tracking purchases is the most significant way retailers gather information." Actual purchase behavior is an excellent predictor of future purchase behavior. Whether the loyalty card is a physical plastic card, an app (as in CVS' latest virtual loyalty card for smartphones), or embedded into a credit card, the benefits are designed to reward and motivate incremental spending at a retailer. Insider-only discounts, exclusive offers, and targeted deals encourage greater loyalty from consumers.
As the number of loyalty programs per US household has risen to 18 (although only 8.4 of them are active according to Colloquy, April 2011), it seems that retailers' loyalty programs are not a nice-to-have but a must-have that is expected by consumers. On the flip side, Walmart's consumers expect low prices - every day, every time they shop - and with minimal hassle or need to produce a loyalty card or frequent shopper number. Time will tell if Walmart raises the stakes in the supermarket loyalty landscape to win greater share from its shoppers by reinventing and launching a truly innovative loyalty program.
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Companies like Linkable Networks could allow Wal-Mart to keep their Low Price Always position while enabling all the benefits of gathering consumer purchase history and to target customers with relevant offers. Publix, another large "no-card" retailer is testing this now.