Hannaford rolled out a new loyalty rewards program Sunday, catching up with competitors who’ve been using loyalty cards for decades and trying to leapfrog them by going all-digital — shoppers will use smartphones rather than plastic cards when they check out.
Another key difference with My Hannaford Rewards is that it doesn’t provide a discount on individual items. Instead, customers get a 2-percent reward on purchases of items labeled with Hannaford’s brands. The rewards accrue in the customer’s account and can be redeemed every three months for future purchases at Hannaford.
Hannaford President Mike Vail on Friday said the company sees the all-electronic method as the way of the future. “What I’m excited about, what we’re really excited about is … this is an all-digital program.”
Vail said Hannaford was a latecomer to the world of loyalty programs (competitor Price Chopper started in 1990) for two reasons: It was satisfied with customer response to its everyday low price model and it was waiting for technology to advance.
However, research showed that 90 percent of its customers would like a rewards program, so the company began to develop one.
My Hannaford Rewards was rolled out in October at 11 stores in the Burlington, Vermont, area as a pilot program.
Vail said more than 35,000 customers have since signed up at those stores. Hannaford’s 26,000 employees were allowed to sign up for their personal shopping use starting Aug. 1, and tens of thousands of customers outside of Burlington happened upon the app and started using it, even if it wasn’t fully supported in their local store.
The total stands now at more than 100,000 participants. Implementation proved popular, the technology functioned well, and the first quarterly reward redemption went smoothly, so the company expanded the program to all stores at 12:01 a.m. Sunday.
Hannaford operates 181 supermarkets in five states. It is headquartered in Maine, where it was founded in 1883, and is now part of the portfolio of Ahold Delhaize, a major Netherlands-based food retailer with 6,500 stores worldwide.
Customers sign up for the rewards program by providing their name, phone number, email address and street address in person at a store kiosk or online at Hannaford’s website or through the mobile app. The program is designed for use with smartphones and tablets in the store. At home, a desktop computer also can be used.
Customers who forget to bring their smartphones, or discover the battery has died when they go to check out, will still be able to record their purchases and accrue rewards by providing their phone numbers at the checkout.
The program will not collect demographic data such as age, race, hobbies and income that is valuable for marketing efforts.
However, it does track purchases, both individually and through multiple members of the same household (which is why customers submit their home address). The program builds a database of each household’s purchasing habits over a period of months and uses it to select and send promotions, coupons and alerts custom-designed for each customer. Customers can limit or opt out of the email stream if they like.
The company will not sell names or addresses to marketers, but it will use aggregated data gained through the program — how much of each item is being sold at various stores — to further its own marketing and strategy-making.
As the program expands and matures, its uses will grow, Vail said, particularly for purposes such as recall alerts.
“I think you’ll see us advance in that area, certainly with food safety,” he said.
The 2-percent reward is given on purchase of Hannaford, Taste of Inspirations, Nature’s Place, Home 360, Cha-Ching, Etos, Companion, CareOne and Healthy Accents products, which will total about 5,200 items in most stores.
Vail said Hannaford decided a one-price-for-all structure would be easier and better for its reward program than the multi-tier structure used by some other supermarket chains, including its two largest competitors in the Capital Region. (ShopRite’s Price Plus card and Price Chopper/Market 32’s AdvantEdge card each give cardholders a discount on a changing list of products.)
The AdvantEdge card additionally provides an accruing discount on Sunoco gasoline and is good for reduced prices at certain community events such as concerts. Vail said Hannaford may eventually look at external partnerships such as this, but has no immediate plans.
Hannaford’s pricing strategy remains unchanged with the roll out of My Hannaford Rewards, he said. It will print weekly advertising fliers and run a limited number of weekly specials, particularly on fresh items whose price is more variable than nonperishable items.
Vail didn’t expect much change in the prices themselves. The Capital Region and other regions in which Hannaford operates are crowded and highly competitive. The supermarket chain needs to keep its prices competitive, he said.