Tomasz Makaruk
Loyalty programmes in grocery retail - Tomasz Makaruk

Loyalty programmes in grocery retail

The retail grocery chain category is one of the most saturated in terms of the number of organised loyalty programmes targeted at end consumers. As many as 12 chains carry out long-term strategies to keep end consumers by rewarding them for repeat purchases.
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The text below addresses the following topics:

  • Which chains offer loyalty programmes?
  • What is the nature of the loyalty programmes organised in grocery retail?
  • Do these programmes operate offline as well as during online shopping?
  • Can loyalty programme points be used to pay for purchases?
  • What is the level of incentive coefficients in grocery retail programmes?
  • Which loyalty programmes are implemented on the basis of a mobile app?

Loyalty programmes in grocery retail - Tomasz Makaruk

The analysis takes into account loyalty programmes of the above retail chains

The key role of mobile apps

With one exception, all loyalty programmes in the grocery retail chains operate on the basis of a mobile app. According to Google Play statistics, the programmes implemented by Lidl, Żabka, Biedronka Carrefour and Tesco exceed app download thresholds of 0.5 million users.
In the vast majority of cases, registration for the programme itself takes place via the mobile app. In addition, they serve as a virtual programme card, give access to the point balance and participant account and enable geolocation for the purpose of offering dedicated promotions. In some cases, e.g. in the Auchan Skarbonka programme, they also provide information on purchase history, although this is usually only the last 10 transactions, or access only to documented transactions of online purchases (e.g. in the My Carrefour programme).
For most loyalty programmes, access to the functionalities of the programme via a webpage is not even offered.

The character of loyalty programmes

Most programmes in retail grocery chains, e.g. My Biedronka have a mixed point and discount programme. This means that purchases accumulate points that can be used to obtain discounts. In most cases, access to discounts is granted by virtue of programme participation alone.

Three programmes have a strict point character (Żabka – Żappka, E.Leclerc – Client Loyalty Card, Hitpol – Good Client Programme), and two are based on discounts (Lidl – Lidl Plus, Polomarket – POLOcard). One programme (Auchan – Auchan Skarbonka) is implemented using the money back model. By this I mean a set of guiding principles which do not take into account the effect of organising periodic price cuts on the overall nature of the programme.

This distribution is in line with the general tendency on the Polish market for loyalty programmes, which is dominated by point programmes, discount programmes and those of a mixed nature, taking into account both reward criteria.

Incentive coefficients

The value of the incentive coefficient is the quotient of the market price of the reward offered to participants and the value of cash that the participant has to spend in order to be entitled to receive it. For example, if a participant must spend PLN 100 gross (with VAT) to receive a reward with a value of PLN 1 gross, the incentive coefficient amounts to (PLN 1/PLN 100) x 100 % = 1 %. In the case of discount programmes, instead of the price of the reward, the numerator includes the value of the discount or money back granted in nominal terms.

A discussion of the details related to calculation methods was the subject of a separate text, available via this link.

The average value of an incentive coefficient in this market segment slightly exceeds 1 percentage point. The highest incentive coefficients are offered by programmes belonging to E.Leclerc, Żabka and Hitpol. The lowest are offered by Carrefour and Tesco. In the case of rebate programmes, the highest discounts, often exceeding 30 %, are offered by Biedronka and Polomarket. The lowest are Piotr i Paweł and Auchan.

Loyalty programmes in grocery retail - Tomasz Makaruk

Validity period of points and discount offers

While the loyalty programmes of individual chains can be compared in terms of most parameters, the organisers formulate the issue of point validity in the regulations in such a variety of ways that it is difficult to reduce this issue to a common denominator. What do I mean? Let us illustrate this with a few examples.

In the Żappka programme, points are valid for 3 months (accrued by the end of October of a given calendar year, they should be used no later than by the end of this calendar year) if no other purchase is made within 3 months from the date of the last purchase during which the participant’s ID is scanned. At the same time, the participant’s account will be deactivated if he or she is not active in the programme for a period exceeding 12 months.

In the Topaz shop chain programme, the point validity period was set at 18 months, but in the absence of a minimum of 1 transaction using the TOP Card during a 12-month period, the account is closed (in contrast, in the Tesco Clubcard programme, this period was set at 24 months, and in the POLOcard programme to 6 months).

In the case of discount offer validity – each has its own specific validity period.

Which programme stands out on the market?

By far the most innovative programme is Lidl Plus, launched in April 2019, due to its functionality for Lidl Pay contactless payments. This turns out to be an important differentiator during a pandemic, where the lack of contact with banknotes or the need to enter a PIN on the terminal is a significant advantage. Another distinguishing feature is e-receipts, i.e. virtual versions of receipts for purchases made using the mobile app, which are stored in the app on the participant’s individual account.

Loyalty programmes in grocery retail - Tomasz Makaruk

Screenshots of the app from the standout Lidl Plus programme

It is also worth noting the diversity of the My Carrefour programme, in particular the fact that this programme works when shopping online, as well as the fact that Carrefour also offers the Family Card and Senior Card programmes simultaneously.

An interesting distinguishing feature of Carrefour’s offer is also the functionality known as Scan&Go. All the client needs to use it is a smartphone and an updated version of the “My Carrefour” app. After scanning the barcodes of products with the camera on a phone, the scanned products are automatically added to the virtual shopping cart and total purchase value is calculated. After scanning all the products, clients should go to the checkout desk and pay for their purchases using their preferred payment method: cash, payment card or mobile payment using the Masterpass digital wallet. In this case, the code generated by the app when the user clicks the “Finish shopping” button must be presented at checkout.

Loyalty programmes in grocery retail - Tomasz Makaruk

What is also worth mentioning in the My Carrefour programme is the progressive nature of calculating points, where purchases on a receipt with a value between PLN 0.01 and PLN 9.99 are rewarded 1 point, and each subsequent PLN 10 spent results in 3 points.

Regardless of this, each of the programmes offers specific solutions that are worth paying attention to and which constitute an advantage. In the case of:

  • Auchan Skarbonka – it is the ability to pay with accumulated funds for the entire shop assortment;
  • Tesco Clubcard – the fact that the loyalty programme also works during online shopping;
  • Client Loyalty Cards of E.Leclerc – the high incentive coefficient that exceeds 1.5 % (which is as much as 3 times higher than competitor programmes);
  • POLOcards from the Polomarket chain – the high level of discounts offered to participants in the case of special offers, often exceeding 30 %.

Loyalty programmes in grocery retail - Tomasz Makaruk

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Loyalty programmes in grocery retail - Tomasz Makaruk Tomasz.Makaruk@i360.com.pl
Loyalty programmes in grocery retail - Tomasz Makaruk 22 331.09.97

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