Smart Consumer: Loyalty cards allow retailers to point you in right direction

Shelflife editor Caroline Byrne says loyalty cards offer "a lot of potential for retailers and consumers alike".
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Thursday November 26 2009
If you spend €100 in one of the big supermarkets you'll earn €1 in points on your loyalty card. Is it worth it? It will take a good deal of shopping to earn enough to buy more products: still, it translates as free goods at the end of the day and you can't argue with that.
But what do stores gain from rewarding us in this way? And when it comes to ambling around the aisles, just what effort is put into ensuring that we buy what we want, and what we don't yet know we want?
Caroline Byrne who edits Shelflife magazine believes that loyalty cards offer "a lot of potential for retailers and consumers alike. Aside form earning points, consumers benefit by having specific promotional material sent to them, for items they actually want".
The reason you can be sent promotional information and money-off vouchers for items you are likely to buy is that information on everything you buy, and for which you use your loyalty card, is stored and analysed.
"There is very sophisticated software enabling supermarkets to analyse this information in detail," explains Damian O'Reilly, DIT lecturer in retail management. "They can see that of all the people who bought one item for example, 30pc also bought another specific product and this may prompt the stores to place the products near each other.
"Likewise, the data will show whether there are more families with kids shopping at a particular store," continues O'Reilly, "and this may have an influence on the display of the products in that store, where children's cereal is placed at the kids' eye level for example.
"Companies will say that they are "customer-centric" in their use of the information available to them," says O'Reilly. "The product a customer wants is going to be put in front of them."
Or, if it something almost everyone will definitely buy, it'll be placed at the back of the store. Ever wondered why you have to walk down miles of aisles to get to the milk and eggs? It's because we'll be buying them anyway, and the more products you see on the way, the more you're likely to buy.
As for other products, they must catch our eye before we buy them. So special promotions are placed at the top or bottom of aisles so that we can see (and buy) them easily, and products we want to buy will be placed nearer to the ends of the aisle too. It's all about store and shelf placement and the use of colour too.
Store and shelf positioning is key. So much so that O'Reilly says suppliers put forward 'planograms' for the spaces their products should inhabit. Supermarkets may use these or not.
We will see products at eye level first, so this is prime supermarket real estate. Bulkier items will be lower as will products that appeal to children, so that they can spot them and nag mum and dad.
This 'category management' is the most important aspect of supermarket psychology in O'Reilly's opinion. "The retailer is trying to see how you make a decision as to what you buy", he says, "and then facilitate that process".
"For example, when you think of fresh soup, you might think of warmth and comfort, so a product like noodles might be placed alongside. Or when you are buying wine you might think of colour above region, so in some stores wine is separated by colour rather than country.
"This is why fresh bread is not placed beside sliced pan", explains O Reilly, "fresh bread is a 'use now' product and is not related to the other kind in the shopper's thoughts".
Similar thinking places fresh food together, often at the front of the store to give an impression of fresh, healthy produce and a shop worth trusting in.
And what of colour? Colour psychology links patterns of colour with patterns of behaviour. Have you noticed Tesco's price cuts signs in red? This is because red objects appear closer than they are so we will notice them first.
We might also choose a product on colour; milk is either red, blue or green depending on your preference, and purple is associated with luxury and premium brands.
Caroline Byrne says that all of this "is absolutely better for consumers".
"Shopping trips can work better for you and you can get to the products you want without getting stuck", she points out, before adding, "it drives sales for retailers too".
- Tina Leonard
Irish Independent



