NEW ORLEANS -- The number of store units offering card-based frequent-shopper programs increased sharply from the second quarter of 1996 to the first quarter of 1997, moving from 4,235 to 5,867 -- a 38.5% increase in a nine-month period.
These figures, based on surveys conducted by Retail Systems Consulting, Naples, Fla., indicate retailers' increasing use of frequent-shopper programs to reward loyal customers and gather information on shopping patterns. Survey results were presented at the 6th annual Global Electronic Marketing Conference, held here earlier this month.
Results from a consumer household survey conducted by ACNielsen, Schaumburg, Ill., which were also presented at the conference, reflect the widespread acceptance of such programs. Nationwide, 35% of households have at least one frequent-shopper card for grocery purchases, and of this group, 67% always use the card when shopping.
RSC included in its study 75 chains currently using or rolling out frequent-shopper programs. More than 70% of these chains consist of 20 or more stores.
RSC, which contacted retailers via telephone to determine how many of their stores offered frequent-shopper programs, reported that the 5,867 store units represent 18.9% of all supermarket stores in the United States.
"The current frequent-shopper store count actually has the potential of being much higher, as the existing chains complete their rollouts," said Barry Kotek, managing partner, RSC. "When the rollouts are completed, an additional 1,360 supermarkets will have frequency programs, bringing the total to 23% of all supermarkets on a store-count basis."
Measuring the All Commodity Volume of the stores with frequent-shopper programs, RSC estimates it represented 25.8% of supermarkets' total ACV in the first quarter of 1997. This figure also increased from the second-quarter 1996 survey, when it equaled 17% of the total.
The survey also revealed marked differences by region, with New England and the Mid-Atlantic leading in frequent-shopper penetration, measured both by store units and ACV percentages.
In New England, for example, the ACV at stores with frequent-shopper programs was 45.2% of the total in 1997; it was nearly as high in the Mid-Atlantic, at 43.1%. Frequent-shopper programs have achieved the lowest penetration levels in the Southeast, Southwest and East Central regions, with ACV percentages there below 20%.
If the pace of growth indicated in these surveys continues, some regions will reach what Kotek calls a "critical mass" for frequent-shopper programs.
"As the percentage of ACV in a region nears 60%, manufacturers become interested in shifting funds out of traditional vehicles such as freestanding inserts and supporting retailers' frequent-shopper programs with their brand dollars," said Kotek.
The Nielsen study, which compiled information from 33,000 U.S. households, indicated sharp market-by-market differences in consumer participation in frequent-shopper programs. Markets with participation well above the national average include Chicago, where 89% of consumers are frequent-shopper members; New York, with 71%; Buffalo-Rochester, N.Y., with 67%; and Boston, with 60%.
Markets with less than 50% penetration were concentrated in the South and Southwestern regions, said Jane Perrin, Nielsen's vice president of market research, who presented the survey results. The four markets with the lowest percentages were Seattle and Denver, with 11% each, and Minneapolis and St. Louis, with 12% each.
Perrin said the major factors affecting market penetration include the number of retailers offering such programs, the length of time such programs have been offered and their quality in terms of value offered to the consumer.
Consumers were also asked why they participated in frequent-shopper programs. The highest response, 69%, was consumers' desire to receive additional savings at retail, while 17% cited the ability to write checks at the supermarket.
However some of the lighter participation markets, a larger percentage of consumers said they used the cards in order to write checks than to get savings," said Perrin.