Supermarkets today are facing unprecedented competition ever. It seems that some old ways to attract costumers are becoming more ineffective. A typical example is the loyalty card.
20 years ago when loyalty card first used in Tesco, it brought a huge damage to its competitors because the membership card offered people a totally new way to save money. What’s more important, it gave us a “visible discount” by getting freebies and cash back.
However, the situation changes nowadays. Almost all the supermarkets copy this promotion idea, therefore, it makes no difference for costumers choosing where to go. Furthermore, there is a big problem that some retails set higher good price than it should be, and after the “membership” discount”, the price just seems lower. In fact, costumers do not get any discount this way. Many people realized this problem so that more and more shoppers seemed to have wised up to the fact that they are better off with the permanently low prices of the discounters than the vouchers and cash backs that the big four’s loyalty schemes offer. Membership card become a kind of decoration in our wallet.
In my point of view, membership card is not the only way to keep the consumer loyalty. It is the time for managers to make differentiation strategy rather than following others blindly. Also, the companies should build their own brand proposition, which can keep a healthy and reliable image in people’s mind. That is exactly the internal motivation to push consumers to choose. On the other hand, companies who choose to keep loyalty card should balance their profit better, in order to avoid unnecessary loss from excessive promotion.
materials from: http://www.economist.com/news/business-and-finance/21622994