Article

Supermarket chain Big Y offers rewards card - with a fee

While some consumers expressed interest in the new plan, others were unenthusiastic.

May 2, 2011

The following is an excerpt from a recent conversation on RetailWire, with comments from its panel of contributors.

Big Y Foods Inc., a Springfield, Mass.-based supermarket chain, has launched a new savings program for its customers on top of its current loyalty card. What makes this program different is that to get the additional savings promised with the Silver Savings Club card, shoppers need to pony up a $20 annual membership fee.

"It's like a warehouse store within a traditional store program," said Harry Kimball, Big Y's director of database marketing, told the Hartford Courant newspaper.

Big Y's existing Express Savings Club program is free of charge. Shoppers receive gold and silver coins based on their purchases that can be redeemed for discounts on specific items sold in the chain's 61 stores. Big Y customers present the coins at checkout to receive their discounts.

While redemptions in the free program are on a one-to-one basis, members of the Silver Savings Club may "purchase up to five of any individual item" that has a special silver coin price.

Another benefit of the fee-based program is consumers do not actually have to present coins to get discounts. Members of the Silver Savings Club receive benefits on top of those offered in the Express program.

"The coin program is very popular, but customers asked us for a more convenient way to do it," Mr. Kimball told the Courant.

While some consumers expressed interest in the new plan, others were unenthusiastic.

Regina Wytas, a Connecticut resident who shops at both Big Y and Stop & Shop, told the Courant, "It's only a deal if you're interested in the items they have on the silver coin list."

Big Y seemed to anticipate objections like those of Ms. Wytas. The company prints out savings associated with its fee program on every checkout receipt. If the savings consumers receive don't surpass the membership fee, Big Y will refund shoppers the $20.

RetailWire BrainTrust comments:

Potentially a very smart move. Consumers are beyond the point of fatigue with free loyalty programs that offer little value. A membership fee implies value. Hopefully they can deliver on that expectation. - Doug Stephens, President, Retail Prophet

I think that the Super Savings Card can be a beneficial program for both the retailer and the consumer. However, the key will be how it is communicated. It's rare that a retailer--supermarket or otherwise--would have two separate programs. Big Y needs to make sure that existing members don't get confused between the two programs. Additionally, if the second program is ultimately disappointing, participation in the first will likely dwindle. - Gregory Belkin, Research Analyst - Retail, Aberdeen Group

Is Big Y in the grocery business or in some promotional business? The U.S. supermarket needs to reinvent itself in the fashion of today's diversifying wants and needs but not with more gimmicks. - Gene Hoffman, President, Corporate Strategies International