Bribery through bar codes

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The Independent Online
IN THE old days, you just got your tongue coated in gum (do you remember Green Shield stamps?). Nowadays electronic points awarded for the amount you spend mean prizes - and in one case even Air Miles, writes William Kay.

As the big supermarket groups quietly admit defeat in the price war with the discounters, attention is switching to incentive schemes to foster customer loyalty.

'The breakthroughs in front-end technology which have occurred over the last five years have opened up the potential for sophisticated use of loyalty incentives,' says Nigel Davies, food retailing analyst at Robert Fleming Securities.

Key to these wheezes is the detailed information recorded by EPOS - the electronic point-of-sale equipment without which no checkout assistant can function. This enables managements to encourage the frequency, basket size and even timing of shopping trips.

Of course, bribing or blackmailing supermarket customers to fall in love with them is nothing new.

In the 1960s and 1970s, the late Richard Tomkins made a fortune from Green Shield Stamps, an American import. Shoppers were given stamps in proportion to the amount they spent. The stamps could be exchanged for gifts at special redemption centres.

Tesco used them to steal a march on J Sainsbury, which refused to touch stamps. But Sir Ian MacLaurin established his ascendancy at Tesco when he persuaded the company to drop stamps in 1977. His Operation Checkout price-cutting campaign nearly doubled Tesco's market share.

The supermarketeers continually run local promotions varying from money-off coupons to price reductions and discounts for multiple purchases. New Year's Day visitors to Tesco got pounds 3 off every pounds 30 they spent.

The group's successful Computers for Schools gives a voucher for every pounds 25 spent. Schools have redeemed the vouchers for more than pounds 3m of Acorn computers and software.

Safeway has even run trials of a version of the Air Miles scheme that has got some airlines into such hot water.

But in the past few months, amid a veil of self-important secrecy, all the big supermarket groups have experimented with loyalty cards giving rebates or discounts tied to spending levels.

Sainsbury's Savercard offers up to pounds 50 off for every pounds 1,000 spent. Tesco's Clubcard awards one point for every pounds 5 on bills over pounds 10. A 50-point tally earns a pounds 2.50 voucher.

Asda is understood to be going national with its Catalina electronic coupon system, which prints money-off vouchers when selected brands pass over the laser scanner.

And, while Safeway's Air Miles plan is still being monitored after a year, it is issuing a Savers Card. Swiped through the till, it clocks up bigger discounts as more is spent.

It is no coincidence that that plan and Tesco's Clubcard are being run at Thurrock in Essex - home of Costco's first warehouse.

'Basically everyone is launching a similar scheme,' says retail consultant Siemon Scamell-Katz, 'so eventually none will have any discernible difference. Until the major multiples wake up to the fact that they have to think differently about the way they retail, loyalty schemes will be worthless, except that they give away more to the consumer.'

(Photograph omitted)