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RedCard, loyalty cards: intensifying demand for insights


I recently attended the National Retail Federation’s Big Show in New York, an international conference with roughly 30,000 attendees from across the retailer, vendor, and research community.

The speakers ranged from Kofi Annan to Walmart’s Bill Simon.

As for Canadian retail, one presentation that caught my attention was hosted by Metro Inc.’s chief marketer, Marc Giroux and Dunnhumby Canada’s chief operator of International Markets, Marc Fischli.

Their presentation addressed Metro’s usage of loyalty card data to refine appeals to their best customers. Explaining that the average Canadian has 14 loyalty cards, they sought to differentiate their metro&moi card.

Giroux detailed how Metro surveyed shoppers in Ontario and Quebec to found that they particular request rewards to be “simple”, “clear”, and “instant rewards.”

This is Target’s REDcard.

In contrast to programs such as PC Points, Optimum, or metro&moi, Target’s REDcard – its debit or credit card - gives shoppers 5 per cent off at the check-out, every trip.

This is as immediate and simple as loyalty programs get. Given Canadian’s affinity for deals, the REDcard should prove to be more successful in Canada than it is in the United States, where 20 per cent of its sales are expected to be through the card by the end of 2013.

Such demand for the card will usher several challenges for the industry.

Competitors will need to demonstrate the value of their loyal offers.

Shoppers Drug Mart has been using Optimum as a “relationship management tool”, honing appeals to its loyal customers.

Loblaw, and most likely Canadian Tire, will debut new loyal card offers this year, undoubtedly in view of Target’s proposition. As they contend, anticipate seeing more sizable and more immediate loyalty offers.

For Target, the REDcard’s appeal is double-edged.

Its adoption should drive bigger baskets and increased trip frequency, ideally for routine consumables needs.

The card may also be used as a tool to incent trial of its services.

Conversely, bargain hunters may simply behave opportunistically: why not add a 15th card to their purse if it furthers the deal?

Not getting the anticipated sales lift from card users would only elevate margin pressure on the retailer and, consequentially, its suppliers.

Such pressure may also limit the retailer’s means to offer aggressive shelf prices for new guests interviewing its stores.

In the end, the biggest impact of this year’s attention to loyalty cards is going to be the heightened demand for shopper insights across the industry, as retailers will seek to differentiate through a deeper, more granular customer understanding.

To further this discussion, join us at Kantar Retail’s Target Canada Workshop in Toronto and Minneapolis in May 2013, or email me at: [email protected]

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