The familiar ‘beep’s’ have long greeted customers as their weekly shopping glides over the checkout scanner, punctuated by a request from the attendant for ‘fly buys’ or ‘rewards card’, depending on their preferred grocer.
The understanding of what these ‘reward’ cards actually do varies from shopper to shopper. For some, the relationship does not extend beyond the accumulation of points for some inferred benefit. For others, it is one of many opportunities to capitalise on the offerings from all manner of retailers seeking to extract some form of loyalty from the purchaser. One aspect however, which is overlooked or perhaps not even known, is what information this seemingly innocuous act provides the Australian supermarket duopoly via scanner data?
Your life story in 1000 beeps……
‘Whenever you go into a grocery store, your purchases are scanned…the company knows what you bought, what brands you bought and how much you paid for everything’ Iacobucci (2014 p.206). For the conspiracy theorists, this may present some concern, though for most, a simple shrug of the shoulders would suffice. It doesn’t stop there though, with additional marketing research techniques employed by the retailers to refine the marketing mix to increase customer and organisational value.
Would you like insurance with your bread?
Whilst there may be a collective ‘who cares’ regarding the collection of data for grocery related marketing research, consumer sentiment may by piqued with the realisation that this is being used for much broader purposes, specifically, the development of insurance and banking products.
The application of this data, when combined with other information obtained through various B2B partnerships, enables a deeper understanding of the individual consumer’s lifestyle. A direct example of this is the Coles joint venture with GE Capital Australia which has resulted in the development of Coles credit cards and personal loans, whilst also providing insurance products underwritten by its parent company Wesfarmers. Coles are able to use the requisite data to determine budgets, habits and risks of individual customers and develop financial products to suit.
The ACCC have flagged the potential benefits to the customers with regards to decreased interest rates and insurance premiums. This has been countered however, with consumer rights group Choice, querying ‘how comfortable would you feel if an unhealthy shopping list affected your ability to obtain credit? Or if the purchase of, say, medicine or maternity wear increased your insurance premium? Psaros (2014)
The launch of Coles Mobile Wallet, a new payment technology that links their rewards program with the Coles credit card, will only further aid this understanding of individual consumerism. Coles will no doubt use the primary data collected from these expanded services to tailor products for customer consumption and engender increased loyalty to their brand. Additionally, ‘Coles ability to aggregate the data it collects through multiple channels may, for example, allow it considers customers’ alcohol purchasing habits in assessing car insurance risk.’ Sweeny, Hayson (2014); Guilty before proven innocent?
Good or Bad – you’ll decide
Increased competition to the big 4 banks is always welcomed and the expansion of Woolworths and Coles into the financial market may provide this. The question that should be asked though, is at what cost? These two already enjoy a combined 70% market share, which would only be expanded as customers become intrinsically linked to either provider. This could potentially lead to decreased competition in other sectors, unable to offer the broad choices marketed by the supermarket monoliths.
Consumers will ultimately vote with their wallets, or in the case of Coles customers, their Coles Mobile Wallet, though perhaps a broader understanding of how we arrived at this point needs to shared, and importantly, understood, so informed decisions can be made.
After all, could we one day been negotiating a payment plan for an outstanding credit card bill at the checkout before they allow us to purchase our weekly shopping, or raise our insurance premiums because of our chocolate cravings? Food for thought…..
Iacobucci, D 2013 Marketing Management (MM) 4th edition, Cengage Learning
Psaros, B 2014, Coles, Woolworths, and Big Data: Could your choice of cereal affect your insurance premium, KordaMentha, 22 September 2014, retrieved 17 April 2016, <http://kordamentha.com/forensic/forensic-spotlight-with-kordamentha/forensic-spotlight/2014/09/21/coles-woolworths-and-big-data?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original>
Sweeny, P & Hayson D 2014,The fresh credit people – Retail giants and financial services, McGrathNicol, 3 December 2014, retrieved 17 April 2016, <http://www.mcgrathnicol.com/fresh-credit-people-retail-giants-financial-services/>
Image 1: Financial Review 2014, Coles expands financial services, 12 June 2014, retrieved 16 April 2016,<http://www.afr.com/business/retail/coles-expands-financial-services-20140611-ix2qf>
Image 2: Ausdroid 2014, Coles introduces mobile wallet app for existing Coles Credit Card users, 18 July 2014, retrieved April 16 2016 <http://ausdroid.net/2014/07/18/coles-introduces-mobile-wallet-app-existing-coles-credit-card-users/>