Checkers slips into rewards
LATECOMER: WON’T TAKE LONG TO CATCH UP
Not having any franchise operations will prove a huge advantage.
Checkers is finally in the rewards game. Its Xtra Savings card, launched last week, promises instant savings of up to 50% across a number of items on promotion (excluding the odd halo deal, most discounts are in the 20 to 35% range).
The first promo period sees just under 100 products on offer, alongside its typical weekly or fortnightly promotions.
Included are combo or bulk-buy offers, as well as more generic discount pricing on certain products at its supermarkets and liquor shop when swiping the card.
This makes Xtra Savings similar to the Woolworths W Rewards and Spar Rewards programmes, which offer members discounts on specific products each week.
It also allows shoppers to opt in to support a charity or cause beyond the instant discounts.
It differs from the two most popular cashback propositions on the market – Clicks ClubCard and Pick n Pay (PnP) Smart Shopper – where customers earn points (effectively cashback) on each shop.
Checkers (Shoprite Holdings) is the last major supermarket group to roll out a rewards proposition. It piloted Xtra Savings at some Western Cape stores in 2016, before shelving the project.
Retailers use rewards programmes to fulfil two vital roles.
For customers, they provide additional incentive – via discounts or cashback – to shop at a specific retailer.
More importantly they provide invaluable data about customers (and behaviour).
As PnP pointed out, Smart Shopper has provided it with seven years of data to help drive business decision-making! And this data is shared with suppliers.
In the wine, baby and pets segments, PnP has launched opt-in clubs that offer three times the normal Smart Shopper points. You can bet this is funded by supplier rebates, showing just how beneficial this customer-behaviour data is.
Being late to the game means Checkers has a long way to go to catch up. Right now, it has a more limited understanding of its customers (likely mostly derived data).
Filling the gap in its limited understanding is one of Shoprite Holdings’ nine strategic focus areas for 2020.
In fact, its next era of growth (2020 to 2022) is premised entirely on the “shift from explosive expansion to precision retailing”.
One wonders to what extent its major suppliers pushed it in this direction.
Reading between the lines, it is possible it decided to first complete its fundamental (and disruptive) overhaul of its enterprise IT system before it went down the loyalty programme road.
Given the strength of its centralised supply chain, it needed to be confident it was ready.
Shoprite Holdings has an almost unparalleled ability to roll out promotions – Checkers single-handedly launched Black Friday in South Africa – and will use this to its advantage (Xtra Savings members will get to see this year’s deals early).
And while it won’t catch up to PnP overnight, it has another huge advantage: Checkers doesn’t have any franchise operations (which typically adds complexity).
It will keep driving this centrally, like it does with any other initiative.
Hilton Tarrant works at YFM.