Grocery stores use loyalty cards to alert customers to recalls

Many supermarket shoppers depend on so-called loyalty cards for in-store discounts, but few of them
Celeste Farhart of Gloversville, obscured at left, hands her Price Chopper AdvantEdge card to cashier Elizabeth Popolizio at Price Chopper in Niskayuna.
PHOTOGRAPHER:
Celeste Farhart of Gloversville, obscured at left, hands her Price Chopper AdvantEdge card to cashier Elizabeth Popolizio at Price Chopper in Niskayuna.

Categories: Business

The phone rings and a recorded voice, named Brenda, chimes in. But she’s not offering the dream vacation or magazine subscription — this is an important message, Brenda quickly assures. This about a recall of thousands bottles of Samuel Adams beer recently sold at Price Chopper supermarkets.

“They are being recalled because the bottles may have glass defects and very small fragments or slivers of glass,” the recording continues. “Our records indicate that someone in your household may have purchased this product.”

Roughly 12,000 Price Chopper customers received a similar message after Sam Adams issued the recall in early April. Those receiving the call all had one thing in common: They use the Rotterdam-based grocery chain’s AdvantEdge card when making their purchases.

Many supermarket shoppers depend on so-called loyalty cards for in-store discounts, but few of them realize a simple bar code scan could end up saving them much more than money. Increasingly, supermarket chains are relying on these programs to gather the information they need to contact customers almost instantaneously after a recall has been issued.

Grocery chains sift through purchase records gathered by loyalty card programs and can then identify those customers most likely to have bought a recalled item. In the case of Price Chopper’s Sam Adams recall, this data was provided to the southern California-based SmartReply, a third-party company that relayed a customized recall message to thousands of customers at a time.

“We are able to isolate the folks that need to know when it comes to food safety and security,” explained Price Chopper spokeswoman Mona Golub. “We feel an obligation to help customers know the information they need to know and the response on the part of customers has been quite grateful.”

Golub said the beer recall marked the third time this year Price Chopper has used information gathered from its AdvantEdge cards to issue recall alerts. In February, the system was used to warn purchasers of Icy Hot Heat Therapy items, after consumers reported developing burns and skin irritations from certain products. The calls were made again in March, after Stonyfield Farms reported finding “tiny beads” of material mixed into batches of its fat-free blueberry yogurt.

Last week the SmartReply system was activated again, this time to alert customers of a voluntary recall of hamburger patties from Fairbank Farms of Ashville, Chautauqua County, because they might contain small bits of hard plastic.

Price Chopper isn’t alone in using loyalty card information for recalls. The Rochester-based Wegmans first began utilizing information from its Shoppers Club cards in December 2000, when the company mailed out postcard warnings to customers identified as having purchased varieties of cream soup thought to contain a botulism-causing bacteria.

Wegmans spokeswoman Jo Natale said the system was well received by customers, but proved to be somewhat ineffective. Oftentimes, she said, recall information would take several days to reach customers.

“Customers appreciated the postcards, but there was a lag between when the information was sent out and when the postcards would be received,” she said.

Wegmans was investigating a switch to a phone-alert system last fall when it was faced with an optimal chance to give it a trial run. In November, Cargill Meat Solutions recalled more than 845,000 pounds of beef distributed through 10 states after U.S. Department of Agriculture samples from a Pennsylvania plant tested positive for harmful strains of E. coli bacteria.

Natale said Wegmans used SmartReply to contact more than 190,000 customers who were suspected of buying the recalled meat. It was the largest recall of fresh meat ever encountered by the grocery chain.

“When the recall happened, we had to speed up our time line,” Natale said. “We felt that the circumstances were warranting its use.”

Using programs as an early warning system is an ongoing outgrowth of the loyalty card phenomenon. Originally, the cards were put into use as an efficient and cost saving replacement system for tedious practice of clipping coupons from supermarket advertisements.

Today, supermarket loyalty cards offer everything from access to in-store coupon dispensers to personalized shopping lists. The cards use a bar code to create a profile of their holders, so that grocers can track everything from the frequency of item purchases to the average monetary amount of transactions.

This data can then be used to tailor marketing offers at the customers most likely to use them. By targeting specific customers, stores can minimize their expenses when waging promotional campaigns, while maximizing their effectiveness, explained Sanjay Putrevu, chairman of the marketing department at University at Albany.

“It gives them an idea of what you buy, so they can be more effective in marketing,” he said.

Putrevu said the loyalty cards also have the effect of turning shoppers into return customers. Once a consumer has signed up for a loyalty card, they’re more likely to revisit stores where it is valid.

“It’s like a hook to keep you coming back,” he said. In addition, Putrevu said loyalty cards offer large retailers an glance they wouldn’t ordinarily get into the habits of consumers. By offering a few bargains, companies can get a more intimate look at their customer base rather than tracking inventory trends.

“It lets them collect some relatively simple information and it gives them access to the consumers,” he said.

But loyalty cards haven’t hit the shopping circuit without their share of controversy over privacy issues. When Price Chopper first unveiled its AdvantEdge card in 1991, some shoppers were hesitant to sign up for the program out of fear their private information might be given to third-party companies, such as telemarketers, credit bureaus and any other business interested in collecting such data.

In 1999, the Partnership for Civil Justice, a Washington, D.C., consumer rights group, lashed out against loyalty cards, claiming shoppers were forced into the programs to maximize their savings, but had no way of knowing the ultimate fate of the data collected. They also raised concerns about whether such data could be subpoenaed for legal purposes.

During the same year, the consumer advocacy group CASPIAN was founded in an effort to educate shoppers about loyalty card marketing strategies. Primarily, grass-roots organization faulted loyalty cards for offering misleading savings for customers, while collecting vast volumes of information that could violate their privacy.

Stephanie Nelson, a syndicated columnist who writes about strategic grocery shopping, has observed plenty of consumer resistance to loyalty cards.

“People seem to be put off by the idea because of privacy issues,” she said. “I never really understood that because everyone can see what you’re buying anyway.”

Moreover, Nelson said the cards offer a prime way for consumers to maximize their saving on the items they purchase the most. Many companies use the information they garner through the programs to pinpoint coupons and other promotional discounts.

Nelson said shoppers shunning these programs also misguidedly believe the cards are simply replacing coupons. In actuality, the cards provide modest discounts on items that are likely to cost slightly more than at stores not offering loyalty programs.

“If a store has a loyalty card and you don’t use it, then you shouldn’t shop there at all,” she said. “If your local grocery store has a loyalty card, you have to give into it because otherwise you’re paying a lot more.”

Officials from both Wegmans and Price Chopper say their loyalty card programs exist solely for the benefit of their customers, whether it be through in-store savings or by offering nearly instantaneous information about potentially dangerous recalls. Both supermarket chains ensure the information they gather from the cards is kept in confidence, not shared with other companies for commercial use.

“We think it’s critical to honor that trust,” Golub said.

Both companies also offer shoppers an opt-out clause when it comes to the recall alerts. After a Wegmans alert is delivered, Natale said, customers can key a number to opt out of future recall messages.

“A very small percentage of customers have done that,” she said.

And in the case of Price Chopper, the recall system is activated under only the most severe circumstances. Golub said the phone calls are made only in recall situations where the consumer could be harmed by the product.

[The loyalty card] is to give people more of what they want,” she said. “In this case it’s a way to provide people with valuable information at lighting speed.”

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