The card game: As more grocery chains deal out discount cards, shoppers take sides: savings versus privacy

By Stephanie Dunnewind
Seattle Times staff reporter

Seattle, WA - 5/15/02 - Love 'em or hate 'em, grocery-store cards will likely become a fixture in the wallets of Seattle shoppers who want the best prices.

The area's largest chains, Safeway and QFC, require store cards to receive most discounts. The area's two remaining large chains, Fred Meyer and Albertson's, may follow.

Two upset shoppers blanketed the affluent Eastside neighborhoods of Hunts Point, Yarrow Point and Medina with 500 fliers asking residents to sign a boycott petition against QFC, which introduced its "Advantage Card" this month.

"It was one thing when Safeway started its card program," said organizer Ekhard Preikschat, a Yarrow Point resident who has shopped at QFC for 32 years. "If you didn't like it, you just shopped at QFC. Now the options are few and far between."

The cards allow stores to track everything shoppers purchase and, if provided with accurate information, tie this to an individual's name, address and perhaps phone number and e-mail address.

"The data we collect will be used for one purpose only: to reward our frequent and best customers with specific items based on their individual shopping habits," said Dean Olson, spokesman for QFC.

In addition to sale prices, some stores offer such benefits as airline miles, charity donations or a set percentage off the total receipt for consumers who use their cards.

Albertson's, which has 23 stores in King County, is conducting market research to decide whether to expand its "Preferred Card" program from other parts of the country, said spokeswoman Jeannette Duwe.

"We're determining whether customers are telling us they want a card," said Duwe. It may be instituted in one area but not another, she said.

A spokesperson for Fred Meyer, which ran ads touting itself as a no-card alternative when Safeway launched its card program here, would not confirm or deny rumors that it planned to start a card program this year at the 16 local Fred Meyer stores. Fred Meyer's parent company, Kroger, also owns QFC.

Smaller chains such as Trader Joe's (seven stores), Top Food & Drug (five stores), and independently owned Thriftway stores (nine stores) and independently owned Red Apple Markets (seven stores) do not plan to start card programs.

"We don't feel the need to get personal information to give sale prices," said Ilga Westberg, marketing director for Food Markets Northwest, which operates the Queen Anne and Admiral Thriftways.

Larry's Markets, which has six Seattle-area stores, does not require a card for sales but charges a $40 annual fee to belong to its "Epicurean" club. Members receive discounts on upscale items such as caviar and gourmet food and receive invitations to special events such as wine tastings.

PCC Natural Foods has long offered benefits to members who pay a one-time fee and carry a card. However, members were vocal that "they didn't want more Big Brother stuff" so the seven-store chain tracks total purchase amounts and shopping frequency but not individual items, said Trudy Bialic, manager of public affairs.

A national telephone survey by the Food Marketing Institute this January found that half of the 1,000 respondents said their primary grocery store offered a frequent-shopper or savings-club program, up from a third in 1996. Of those with a club program, two-thirds say they use it at least once a week and 87 percent use it at least monthly.

'Not the way to treat people'

Not everyone is a fan, however.

"What I object to is the coercion of 'Give us your information or pay,' " said Seattle resident Thad McArthur, who sent a letter to QFC management saying he would take his $600-a-month grocery expenditures elsewhere. "That, I think, is just really obnoxious and not the way to treat people."

McArthur said he lives close to a Safeway but drove several blocks to shop at QFC. Given that QFC and Safeway are the largest local chains, shoppers who don't drive or who live in neighborhoods with only one store will have to either pay higher prices, join up or fudge when supplying personal information.

While some patrons initially complained when Safeway introduced its "Club Card" in Seattle four years ago, they represented "an extreme minority viewpoint," said spokesman Brian Dowling.

"It has been very successful and very well received by our customers," Dowling said. "It provides our customers with the opportunity to take advantage of sales where in the past they had to use coupons."(Some deals still can be had with store coupons.)

When The Seattle Times sent shoppers last Thursday to buy 11 common grocery items at five local grocery stores, it found Fred Meyer and the Queen Anne Thriftway stores without cards had totals lower than or comparable to QFC and Safeway with a card for the items on our list. No coupons were used. Shoppers found several items at the same discounted price without a card as they did at stores requiring a card. (See accompanying chart.)

Consumers who buy items only on sale, either with or without a card, or chose store brands could obviously save more than the Times shoppers, who stuck with brands found at all five stores. Clearly, consumers choose grocery stores based on convenience, quality and service, not just prices.

But for those looking for savings, the one clear message from our unscientific price survey was that shoppers without a store card pay more for the same items than they would at stores that don't use cards. The total cost at QFC and Safeway without card usage was $4 to $5 higher than Albertson's, which, in this survey, had the highest total of the three noncard stores.

The Times survey did not show that QFC and Safeway elevated the noncard prices on the items we bought to make their card prices seem that much lower, as some consumer advocates have contended. However, the noncard price of $2.99 a pound for asparagus was triple the price charged at the other three stores.

Part of the in-group

PCC Natural Markets, which has run a membership-based card program for 40 years, stopped its two-tier pricing system after "bitter" complaints by both nonmembers and members, who pay a one-time $60 fee to join the cooperative grocery.

"We found it created ill will whether you were part of the in-group or not," said Bialic. "It was not a happy system to encourage shoppers."

From a marketing standpoint, though, cards have a definite appeal.

"If I get a card, then I know when I go shopping, I pay less than a person without a card," said Pat Janenko, a lecturer in marketing at the University of Washington's School of Business. "That makes me feel special.

"In the battle for consumers, the more you can make them feel special, the better," Janenko explained. "Cards make consumers feel good about themselves."

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