NEW ORLEANS -- Card-based frequent-shopper programs displayed a remarkable growth rate in the past year, with the number of store units offering such programs increasing 32%, from 5,867 in the first quarter of 1997 to 7,753 in the first quarter of 1998, according to surveys.
Despite the number of new programs popping up seemingly every week, however, only one-quarter of all U.S. stores currently employ customer loyalty programs. But 73.9% of retailers predicted their participation in such programs would increase in 1998 compared with 1997.
These were among the survey findings presented at the seventh annual Global Electronic Marketing conference, held here April 5-7. The conference, which attracted a record high 200-plus attendees, was sponsored by Retail Systems Consulting, Naples, Fla., the Grocery Manufacturers of America and the Food Marketing Institute, both based in Washington.
In addition, the second annual GEM awards, recognizing excellence in electronic marketing during the past year, were presented at this year's conference. Among the winners were Gerland's Food Fair, Houston, for their Customer Advantage frequent-shopper program, and Associated Wholesale Grocers, Kansas City, Kan., for their wholesaler-driven frequent-shopper program.
Frequent-shopper programs' past and future growth was a focus of much of the research presented at the conference. Retail Systems Consulting's Supermarket Card-Based Marketing Update indicated the percentage of all U.S. supermarket units offering customer loyalty programs increased from 19% in the first quarter of 1997 to 25.8% this year, according to Barry Kotek, managing partner of RSC.
In addition, if existing chains with frequent-shopper programs in some of their stores were to roll out such programs chainwide, another 3,600 stores would offer such programs, said Kotek. These 11,000-plus units would represent 38% of all supermarkets in the United States, he noted.
Other research indicated retailers' enthusiasm for such programs. A survey conducted in the fourth quarter of 1997 by SN, Brand Marketing and the Promotion Marketing Association of America, New York, polled manufacturers and retailers about their attitudes toward various types of electronic marketing methods. Highlights of the results appeared in the January 1998 issue of Brand Marketing, sister publication of SN and Executive Technology, all published by Fairchild Publications, New York.
Nearly three-quarters of the 200 retailers surveyed indicated their participation in frequent-shopper programs would increase in 1998 compared to 1997, with none saying it would decrease. This was by far the highest response to any type of marketing method.
Purchase-triggered coupon programs will increase for 41.7% of retailers this year and decrease for 8.3%, the study found. The next most popular marketing method among retailers was electronic kiosks, with 29.2% predicting an increase and 8.3% predicting a decrease in 1998.
John Karolefski, editor of Brand Marketing, is the co-author, with RSC president Carlene Thissen, of "Target 2000: The Rising Tide of TechnoMarketing," a new book that explores the industry's increasing reliance on electronic forms of promotion, as well as methods to leverage databases for more targeted marketing.
Consumers are also embracing frequent-shopper cards, according to research by ACNielsen, Stamford, Conn. A survey of nearly 32,000 households in December 1997 indicated 55% of households have a grocery-specific frequent-shopper card, said Jane Perrin, vice president of market research at Nielsen.
Much of this growth has been recent, with 38% of cardholders signing up for programs within the past 12 months. Only 35% of all U.S. consumers belonged to customer loyalty programs as recently as fall 1996, according to Nielsen's figures.
The frequent-shopper programs are doing the job of encouraging customer loyalty, Perrin added.
Among cardholders, 58% were more likely to shop in a store offering a frequent-shopper program.
More than three-quarters of respondents said they presented their cards "all the time" when shopping, with another 14% saying they presented it "most of the time."
Consumers' motivation for using the card remains simple: the desire for savings at the supermarket. Nearly three-quarters of respondents, 74%, cited this as the primary reason for getting and using their frequent-shopper card.
More targeted marketing efforts are beginning to be recognized by a small group of consumers, according to Perrin, who noted that 4% of respondents named "customized shopping lists" as an ongoing benefit of belonging to a customer loyalty program.