September 21, 2012
FRBuyer: Is Publix Missing Its Rewards Card?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
While earning wide praise for its service from customers and for its fairness and refusal to use slotting fees from vendors, a weakness of Publix, observers say, may be in the area of technology.
Publix only recently established a presence on Facebook and YouTube, weekly ads are now available via smartphone app, and it just announced plans to test online ordering for in-store delis. It’s also reportedly considering a paperless, digital-coupon program. The real problem, though, is the chain’s lack of a loyalty or frequent shopper card, which would allow it to capture consumer data.
But, according to one source, "Publix doesn’t believe its customers should be required to carry a card to get the best deals it offers. Finding value should be simple."
Moreover, the source says, other than Kroger, which has invested heavily in data analysis, most grocery retailers simply aren’t using the consumer data they capture. As a result, their loyalty cards serve as little more than price discount cards, to which Publix is fundamentally opposed. The bottom line is, "Publix is doing just fine without a bunch of consumer data."
Well, for now anyhow.
As Publix moves into new markets where shoppers and competitors behave differently, its lack of data, and particularly shopper data, is likely to become more of an issue, says John Rand, SVP of retail insights for the Market Insight Group of Kantar Retail. For example, "Without the ability to track household level behavior, the company doesn’t know what products shoppers aren’t buying in its stores, so it can’t provide an offer that encourages them to come back to Publix for those items. But they’re already expanding into markets where companies like Kroger do have that data. And as they move up the East Coast, they’ll quickly run into Ahold and Safeway, which have it too. So while it hasn’t been a big problem up until now, it could become a real disadvantage."
As a result, adds Ginny Valkenburgh, SVP at Kantar Retail, vendors that do business — or want to do business — with Publix could find themselves in a better position if they’ve got shopper insights to share. In fact, several vendors say Publix already requires a lot of data, particularly for new items without a proven track record. Because of this, it’s developed a somewhat conservative reputation. "It’s definitely not a risk-taker," confirms one manufacturer. Lack of internal data to inform decisions regarding assortment could be one reason why.
Clearly, says Mr. Rand, Publix has won the home game, rolling over relatively weak opponents in Florida and a handful of other states. But now it’s moving into markets where the competition is likely to be a lot stiffer.
BrainTrust
Recent Discussions
Discussion Questions
To what degree (if at all) is Publix at a disadvantage from not having a loyalty card? Will having access to its customer data become more critical as it expands into other markets? Are there other ways to tap local customer data?
Poll
Clearly Mr. Rand has ignored Publix’ takeover of Metro Atlanta. Publix relies on its vendors for insights — that strikes me as this is free for Publix — how is that bad? If I can get someone else to do the work on assortment analysis, why wouldn’t I? Customer data is over-rated (IMHO) because it is only data from your loyal customers, the least interesting group in terms of leveraging growth.
It’s always good to have data to drive decisions and action, but as the article states, other than Kroger, most grocers aren’t making use of the data they have. And from personal/consumer perspective, the way Kroger uses my family’s data leaves a lot to be desired.
Rather than investing in starting, maintaining and tracking a loyalty program, Publix should aggressively pursue social media, a strategy that allows more flexibility. Through social media, Publix can enter a dialogue with consumers and gain valuable insights.
Most retailers don’t make good use of their loyalty programs, leaving consumers to wonder if they wouldn’t be better served by dropping these programs and lowering prices.
Many of the most successful retailers in the USA don’t have reward cards. For Publix it would be an inconvenience for their customers. Sure it’s great to have data on your customers, but perhaps not having a reward card is one reason why Publix is successful. Consumers don’t really care for them. Especially when they see extremely successful retailers like Walmart, Aldi, Trader Joe’s turn out high sales per square foot performances without them.
Well, the grocery industry in general, while ironically the early adopters in loyalty cards, have not faced the kinds of customer behavior shifts that create greater urgency around understanding shopper behavior over time — not to the same degree that someone on the cross-channel front line, like, say, Best Buy has needed. But cross-channel is coming to grocery too, and understanding customer history is going to be an important part of that. I just don’t see how a retailer can look forward to a profitable future without working to understand their customers better. Whether that’s with a loyalty card, or some other mechanism not yet invented, I don’t know that I really care. But customer as a data dimension for planning, for marketing — that’s only going to be more important, not less.
I don’t know who Warren’s unnamed “one source” is, but I’ll take their advice over John Rand’s on this one, and John is a very good retail analyst.
The key point is execution of what you know you need to do. Publix already knows 90% of what they need to know to satisfy shoppers better than other grocery retailers — and they execute it very well. Could the other 10% be a game changer? Only if the other operator also follows through equally well. And I will contend that until Publix runs into Wegmans, they don’t have much to worry about.
As Pop Flynn used to say “Lots of folks know what needs doing, they just don’t get it done.”
Publix does not need to take on the enormous and ongoing marketing expense of launching a loyalty program.
Thanks to recent technological and shopper marketing advances, Publix can issue offers linked to customers credit or debit cards (through Linkable Networks), gain all the advantages of a loyalty program and data insights without having to burden customers with key tags.
Even lacking the major investment in data analysis, Publix does a fine job of differentiating their stores and understanding their customers. Their other strengths: PL, customer service, store standards make them a dominant player in every market they’re in.
If they could only figure out their greengrocer section.
Publix is very slowly starting to take advantage of technology, such as Facebook and online deli ordering, and this slowness will leave them trailing their competition in this area. I understand the reasoning Publix has for not requiring a card for sale prices, but consumers have become accustomed to carrying/presenting loyalty cards and they are really missing the boat when it comes to collecting valuable customer data and shopper insights which can only help them in the long run.
Publix actually has an advantage by avoiding “loyalty” cards. First of all these cards do little for loyalty. I have several and consider them to be a pain as do most consumers I talk to. To think that any retailers would have the gall to penalize any consumer who walked in their store for not having one of their cards is absurd, but they do it every day, endearing themselves to no one.
Publix has the right attitude, as does Walmart. Look who is growing and who isn’t. Customer data is of no value unless grocers can get manufacturers to sponsor promotions for customers based on lousy data. Would you as a supplier offer discounts to any retailer based on data from the retailer’s system (you know, the one that can’t even manage day-to-day pricing at the register properly)?
I have never seen any conclusive proof that these “loyalty programs” actually produce results. Why would a retailer want to tap local customer data? Wouldn’t they be better off spending the time and money hiring and training their employees or using the savings in money and time to deliver greater value? Now don’t tell me they can do both, because if they can but aren’t, then they will be out of business shortly. As for the writer’s opinion that Publix is thriving in the face of weak competition, Walmart is just about everywhere and Publix has held its own against Walmart while every other retailer I am familiar with has lost share. The loyalty card is adopted by managements grasping at silver bullets to stave off insolvency. It was a bad idea when it started and it’s a bad idea today, because it just doesn’t really work!
Accumulating and leveraging shopper insights from loyalty cards will be critical to successful retailing in the future. Armed with the right data, retailers will be able target shoppers more appropriately with the right promotions. Look how well it’s worked for Kroger.
Savvy retailers know this. Safeway has launched the Just for U program. Walgreens is launching a loyalty program. Rite Aid’s relatively new Wellness+ card continues to expand. It’s all about getting to know the shopper better.
By the way, this topic will be on the agenda of the fourth annual LEAD Marketing Conference Oct. 1-3 in Chicago. RetailWire is moderating a panel discussion on all things digital, including loyalty cards. Registration for retailers and manufacturers is complimentary. Check it out at http://www.LEADMarketingConference.com.
Data and analytics are great, but they don’t make up for poorly run stores. We still have a long way to go in terms of analytics, as evidenced to me by the poorly targeted suggestions I get regularly from Amazon and Netflix, to the point that I totally ignore them. And, just this past week I had my AmEx card cloned, apparently while in Denver for Shop.org. AmEx removed the fraudulent charges, which was great, but their dining program subsequently asked me to review a restaurant the thief ate in, using my cloned card! So, I’d rather see Publix continue to do what they do well, and not worry about analyzing individual shopper habits too much.
Loyalty cards are very valuable if the data can be used effectively. As the article suggests, very few retailers have worked out how to do this and so it may not be the right path. However, it is going to be increasingly important to know shoppers as individuals with the growing digital-led demands for relevance and personalization.
I also want to respond to the comments by Dr. Needel on this one too as I fundamentally disagree with these. I have two issues to cover:
1. Supplier insights are not a great answer for Publix. Supplier insights come from many and varied sources, and can even be highly biased! Insights sourced from one retailer or a broad study will not necessarily work at Publix. Basing merchandizing strategies and tactics on borrowed insights that are based on the different motivations of suppliers is likely to result in an inconsistent shopper experience and a path to irrelevance.
2. The most growth comes from existing customers, and of these, the most loyal customers. In grocery retail even many best customers may only spend half their share with you. Getting your store right to meet these needs will not only keep these most important customers coming, it will make them choose you a little more, and will grow your the loyalty of other customers. Kroger has seen most of its growth over the last 9 years come from its loyal customers.
Look forward to the debate!
“Publix doesn’t believe its customers should be required to carry a card to get the best deals it offers. Finding value should be simple.”
HURRAH!!! As a (potential) customer, I’ll give them an A+…as an (amateur) analyst, I’ll give them the benefit of the doubt they know more about what they’re doing than some outside “observers.”
Publix has a lot of BOGOs, but they don’t double manufacturer’s coupons which is a benefit of a lot of other grocery store’s loyalty programs. Most will double anywhere from 10-20 per day depending on the store and only up to 99 cents a coupon, but some of them have specials a few times a year where they’ll triple coupons or “super double” coupons and double face values of $2 or even $3. Of course, to get these deals, you’ve got to use your loyalty card.
With the economy the way it is, this is one way consumers can feel like they’re making a difference in their budgets; I’ve gone to Harris Teeter and with hardly any effort at all but using the few coupons I had on me — while they were doubling them — and my VIC loyalty card, I’ve taken my bill from $220 to $94. If I planned an all out attack like these super couponers do, I could’ve walked out of the store having been paid by HT to shop thanks to my VIC card.
In my opinion, not only is Publix missing out on a great psychological tool to lure customers into the store, they’re missing out on some fantastic marketing opportunities. They can see where their customers are coming from and various other demographics. They can tailor discounts to specific customers to keep them coming back. For example, HT always sends me specials on toilet paper and bottled water. I’ve been able to purchase 24 packs of both for $2.97 limit. That gets me in there. I’ve received e-vic offers about rib eye steak for $4.97 a pound. That doesn’t get me in there, but toilet paper and water does. Once the customer is in the store, they’ll buy more.
Publix hasn’t utilized any of this. The stores are clean, well-stocked, and you almost trip over employees who are friendly and helpful when you’re in there, but the prices are a bit higher. I think they’re overdue for a loyalty program.
Am I wrong here? Supermarket chains with the highest bottom line margins don’t have loyalty cards. On the other hand, of all the supermarket chains that have gone bankrupt in the past 10 years, most of them had loyalty cards. Am I right or am I right?
I think reward card programs can be valuable if the retailer chooses to use that strategy to do customer specific marketing as part of their overall brand experience. There are other ways to analyze shopping data from linking to credit cards and doing basket analysis. In the case of Publix, if the customer experience can be delivered without loyalty cards, all the power to them. Positive customer experience is what wins in retail, a loyalty card is simply one of the means.
Publix is a very strong competitor in its markets because it does so many things right, as reported by panelists. Publix makes its own decisons about how and when to launch new ideas, often experimenting in a few stores, and learning from that.
They continue to “own” their shelves, and decide on assortments; lack of slotting fees makes a difference in how merchandising and marketing plans are implemented. Technology and social media will become more important in days ahead, but on their own terms.
So do they need loyalty cards? Probably not, they understand their shoppers, reach out through local and in-store ads, and listen — then grow from there.
“And as they move up the East Coast, they’ll quickly run into Ahold and Safeway, which have it too. So while it hasn’t been a big problem up until now, it could become a real disadvantage.”
They could successfully bid on the Farm Fresh division of Supervalu in Tidewater/Norfolk Virginia as their next area to conquer after Charlotte NC.
As stated in the article, other competitors in that area use loyalty cards. The game is definitely changing. Publix would be wise to pursue this option as a competitive tool.
This reminds me a bit of JCP, and we all know how that is working out. Of course, JCP has stronger competition.
My experience with Publix is not positive. My latest experience, during my last visit to their new store just north of Miami, included a shoplifter who had stuck a box in her blouse that was sticking out like a sore thumb. The clerk and bagger who checked her and her Mother out were oblivious or complicit.
Regardless, Publix is the beneficiary of weak/limited competition which allows them the latitude to ignore effective selling and marketing strategies.
Publix constantly provides great service and that is what creates the loyalty.
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Clearly Mr. Rand has ignored Publix’ takeover of Metro Atlanta. Publix relies on its vendors for insights — that strikes me as this is free for Publix — how is that bad? If I can get someone else to do the work on assortment analysis, why wouldn’t I? Customer data is over-rated (IMHO) because it is only data from your loyal customers, the least interesting group in terms of leveraging growth.
It’s always good to have data to drive decisions and action, but as the article states, other than Kroger, most grocers aren’t making use of the data they have. And from personal/consumer perspective, the way Kroger uses my family’s data leaves a lot to be desired.
Rather than investing in starting, maintaining and tracking a loyalty program, Publix should aggressively pursue social media, a strategy that allows more flexibility. Through social media, Publix can enter a dialogue with consumers and gain valuable insights.
Most retailers don’t make good use of their loyalty programs, leaving consumers to wonder if they wouldn’t be better served by dropping these programs and lowering prices.
Many of the most successful retailers in the USA don’t have reward cards. For Publix it would be an inconvenience for their customers. Sure it’s great to have data on your customers, but perhaps not having a reward card is one reason why Publix is successful. Consumers don’t really care for them. Especially when they see extremely successful retailers like Walmart, Aldi, Trader Joe’s turn out high sales per square foot performances without them.
Well, the grocery industry in general, while ironically the early adopters in loyalty cards, have not faced the kinds of customer behavior shifts that create greater urgency around understanding shopper behavior over time — not to the same degree that someone on the cross-channel front line, like, say, Best Buy has needed. But cross-channel is coming to grocery too, and understanding customer history is going to be an important part of that. I just don’t see how a retailer can look forward to a profitable future without working to understand their customers better. Whether that’s with a loyalty card, or some other mechanism not yet invented, I don’t know that I really care. But customer as a data dimension for planning, for marketing — that’s only going to be more important, not less.
I don’t know who Warren’s unnamed “one source” is, but I’ll take their advice over John Rand’s on this one, and John is a very good retail analyst.
The key point is execution of what you know you need to do. Publix already knows 90% of what they need to know to satisfy shoppers better than other grocery retailers — and they execute it very well. Could the other 10% be a game changer? Only if the other operator also follows through equally well. And I will contend that until Publix runs into Wegmans, they don’t have much to worry about.
As Pop Flynn used to say “Lots of folks know what needs doing, they just don’t get it done.”
Publix does not need to take on the enormous and ongoing marketing expense of launching a loyalty program.
Thanks to recent technological and shopper marketing advances, Publix can issue offers linked to customers credit or debit cards (through Linkable Networks), gain all the advantages of a loyalty program and data insights without having to burden customers with key tags.
Even lacking the major investment in data analysis, Publix does a fine job of differentiating their stores and understanding their customers. Their other strengths: PL, customer service, store standards make them a dominant player in every market they’re in.
If they could only figure out their greengrocer section.
Publix is very slowly starting to take advantage of technology, such as Facebook and online deli ordering, and this slowness will leave them trailing their competition in this area. I understand the reasoning Publix has for not requiring a card for sale prices, but consumers have become accustomed to carrying/presenting loyalty cards and they are really missing the boat when it comes to collecting valuable customer data and shopper insights which can only help them in the long run.
Publix actually has an advantage by avoiding “loyalty” cards. First of all these cards do little for loyalty. I have several and consider them to be a pain as do most consumers I talk to. To think that any retailers would have the gall to penalize any consumer who walked in their store for not having one of their cards is absurd, but they do it every day, endearing themselves to no one.
Publix has the right attitude, as does Walmart. Look who is growing and who isn’t. Customer data is of no value unless grocers can get manufacturers to sponsor promotions for customers based on lousy data. Would you as a supplier offer discounts to any retailer based on data from the retailer’s system (you know, the one that can’t even manage day-to-day pricing at the register properly)?
I have never seen any conclusive proof that these “loyalty programs” actually produce results. Why would a retailer want to tap local customer data? Wouldn’t they be better off spending the time and money hiring and training their employees or using the savings in money and time to deliver greater value? Now don’t tell me they can do both, because if they can but aren’t, then they will be out of business shortly. As for the writer’s opinion that Publix is thriving in the face of weak competition, Walmart is just about everywhere and Publix has held its own against Walmart while every other retailer I am familiar with has lost share. The loyalty card is adopted by managements grasping at silver bullets to stave off insolvency. It was a bad idea when it started and it’s a bad idea today, because it just doesn’t really work!
Accumulating and leveraging shopper insights from loyalty cards will be critical to successful retailing in the future. Armed with the right data, retailers will be able target shoppers more appropriately with the right promotions. Look how well it’s worked for Kroger.
Savvy retailers know this. Safeway has launched the Just for U program. Walgreens is launching a loyalty program. Rite Aid’s relatively new Wellness+ card continues to expand. It’s all about getting to know the shopper better.
By the way, this topic will be on the agenda of the fourth annual LEAD Marketing Conference Oct. 1-3 in Chicago. RetailWire is moderating a panel discussion on all things digital, including loyalty cards. Registration for retailers and manufacturers is complimentary. Check it out at http://www.LEADMarketingConference.com.
Data and analytics are great, but they don’t make up for poorly run stores. We still have a long way to go in terms of analytics, as evidenced to me by the poorly targeted suggestions I get regularly from Amazon and Netflix, to the point that I totally ignore them. And, just this past week I had my AmEx card cloned, apparently while in Denver for Shop.org. AmEx removed the fraudulent charges, which was great, but their dining program subsequently asked me to review a restaurant the thief ate in, using my cloned card! So, I’d rather see Publix continue to do what they do well, and not worry about analyzing individual shopper habits too much.
Loyalty cards are very valuable if the data can be used effectively. As the article suggests, very few retailers have worked out how to do this and so it may not be the right path. However, it is going to be increasingly important to know shoppers as individuals with the growing digital-led demands for relevance and personalization.
I also want to respond to the comments by Dr. Needel on this one too as I fundamentally disagree with these. I have two issues to cover:
1. Supplier insights are not a great answer for Publix. Supplier insights come from many and varied sources, and can even be highly biased! Insights sourced from one retailer or a broad study will not necessarily work at Publix. Basing merchandizing strategies and tactics on borrowed insights that are based on the different motivations of suppliers is likely to result in an inconsistent shopper experience and a path to irrelevance.
2. The most growth comes from existing customers, and of these, the most loyal customers. In grocery retail even many best customers may only spend half their share with you. Getting your store right to meet these needs will not only keep these most important customers coming, it will make them choose you a little more, and will grow your the loyalty of other customers. Kroger has seen most of its growth over the last 9 years come from its loyal customers.
Look forward to the debate!
“Publix doesn’t believe its customers should be required to carry a card to get the best deals it offers. Finding value should be simple.”
HURRAH!!! As a (potential) customer, I’ll give them an A+…as an (amateur) analyst, I’ll give them the benefit of the doubt they know more about what they’re doing than some outside “observers.”
Publix has a lot of BOGOs, but they don’t double manufacturer’s coupons which is a benefit of a lot of other grocery store’s loyalty programs. Most will double anywhere from 10-20 per day depending on the store and only up to 99 cents a coupon, but some of them have specials a few times a year where they’ll triple coupons or “super double” coupons and double face values of $2 or even $3. Of course, to get these deals, you’ve got to use your loyalty card.
With the economy the way it is, this is one way consumers can feel like they’re making a difference in their budgets; I’ve gone to Harris Teeter and with hardly any effort at all but using the few coupons I had on me — while they were doubling them — and my VIC loyalty card, I’ve taken my bill from $220 to $94. If I planned an all out attack like these super couponers do, I could’ve walked out of the store having been paid by HT to shop thanks to my VIC card.
In my opinion, not only is Publix missing out on a great psychological tool to lure customers into the store, they’re missing out on some fantastic marketing opportunities. They can see where their customers are coming from and various other demographics. They can tailor discounts to specific customers to keep them coming back. For example, HT always sends me specials on toilet paper and bottled water. I’ve been able to purchase 24 packs of both for $2.97 limit. That gets me in there. I’ve received e-vic offers about rib eye steak for $4.97 a pound. That doesn’t get me in there, but toilet paper and water does. Once the customer is in the store, they’ll buy more.
Publix hasn’t utilized any of this. The stores are clean, well-stocked, and you almost trip over employees who are friendly and helpful when you’re in there, but the prices are a bit higher. I think they’re overdue for a loyalty program.
Am I wrong here? Supermarket chains with the highest bottom line margins don’t have loyalty cards. On the other hand, of all the supermarket chains that have gone bankrupt in the past 10 years, most of them had loyalty cards. Am I right or am I right?
I think reward card programs can be valuable if the retailer chooses to use that strategy to do customer specific marketing as part of their overall brand experience. There are other ways to analyze shopping data from linking to credit cards and doing basket analysis. In the case of Publix, if the customer experience can be delivered without loyalty cards, all the power to them. Positive customer experience is what wins in retail, a loyalty card is simply one of the means.
Publix is a very strong competitor in its markets because it does so many things right, as reported by panelists. Publix makes its own decisons about how and when to launch new ideas, often experimenting in a few stores, and learning from that.
They continue to “own” their shelves, and decide on assortments; lack of slotting fees makes a difference in how merchandising and marketing plans are implemented. Technology and social media will become more important in days ahead, but on their own terms.
So do they need loyalty cards? Probably not, they understand their shoppers, reach out through local and in-store ads, and listen — then grow from there.
“And as they move up the East Coast, they’ll quickly run into Ahold and Safeway, which have it too. So while it hasn’t been a big problem up until now, it could become a real disadvantage.”
They could successfully bid on the Farm Fresh division of Supervalu in Tidewater/Norfolk Virginia as their next area to conquer after Charlotte NC.
As stated in the article, other competitors in that area use loyalty cards. The game is definitely changing. Publix would be wise to pursue this option as a competitive tool.
This reminds me a bit of JCP, and we all know how that is working out. Of course, JCP has stronger competition.
My experience with Publix is not positive. My latest experience, during my last visit to their new store just north of Miami, included a shoplifter who had stuck a box in her blouse that was sticking out like a sore thumb. The clerk and bagger who checked her and her Mother out were oblivious or complicit.
Regardless, Publix is the beneficiary of weak/limited competition which allows them the latitude to ignore effective selling and marketing strategies.
Publix constantly provides great service and that is what creates the loyalty.