Seattle Press on Line - Grocery Store Loyalty Cards: The Bigger Picture

Grocery Store Loyalty Cards: The Bigger Picture

Jun 06, 2002 -- Grocery store loyalty cards ask consumers to trade away extremely detailed personal information in return for the promise of savings--a promise that a few informal studies imply is inflated or even mythical. In this article, I want to focus on loyalty cards as part of a broader context: the profiling increasingly being introduced in grocery stores and other retailers. While there are certainly potential benefits to these technologies, I believe that the tradeoffs that you have to make for the convenience and claimed lower prices aren't worth it.

Deals?

The usual rationale for loyalty cards is that it makes stores more efficient at stocking their shelves with products you want, and allows them to pass the savings on to you.

If you think about this for a moment, it doesn't make sense. If all the grocery stores want is to improve their efficiency, they just need to know what items are being sold and what items are bought at the same time. There's no reason for them to need loyalty cards for this. They can record all of this information without knowing who was making the purchases.

Unsurprisingly, then, the few informal studies (see sidebar) that have been done so far have shown that claims of savings by supermarkets may be largely inflated. For example, some stores appear to raise their base prices after introducing a card, and simply have the "discount" from the card reduce the price to its pre-card level. If you have a card, you're saving compared to the people who don't have cards--but not when compared against the prices before cards were introduced.

For more information about loyalty cards:

For an excellent resource on the issues surrounding loyalty cards visit:
http://www.nocards.org/news/index.shtml
For information on surveys/studies on comparisons between cards and no cards:
http://www.nocards.org/savings/comparison.shtml
http://www.amadorbooks.com/nocardsi.htm
Here's an article on data mining:
http://www.eco.utexas.edu/~norman/BUS.FOR/course.mat/Alex/
Article on the Klever Kart, loyalty cards, and privacy
http://www.charlotte.com/mld/observer/business/2688508.htm

Data Mining, Profiling, and You

In fact, the reason that stores introduce cards is so that they can profile and target their customers more accurately--not to give you savings, but to increase their bottom line. Additionally, your personal information can be sold or traded to third parties.

One way that grocery stores create profiles is by the use of data mining. Data mining is a process that is used to predict future behaviors and trends by discerning patterns and relationships from large amounts of warehoused raw (from disparate sources) data through the use of statistics and other mathematical techniques*.

There are positive aspects to data mining such as fraud detection and identification of items that are commonly bought together. But there is a darker side to data mining too.

Use the address information from your loyalty card application to match up your shopping history with data from other databases or public records (income, how much you paid for your house), and now the grocery store knows what kinds of "specials" to offer you--or not offer you, as the case may be. Price discrimination is thus one consequence of data mining and profiling.

Even worse, information about your shopping habits can be accessed with a subpoena or warrant and used against you in court proceedings. In a well-publicized "trip-and-fall" case in California, a man shopping at a Southern California grocery store sued after falling in one of the aisles. It was reported (although the store has since denied it) that the store threatened to use his shopping history--which included large amounts of alcohol--against him in the proceedings.

Some states limit the types of information that a grocery store can collect from you when you register for a loyalty card. For example, California state law prohibits a grocery store from requiring that you turn over your social security card or your driver's license number. However, data matching techniques mean that this provides very little protection to your privacy rights.

Where Do We Go From Here?

Surveillance doesn't come all at once, it often comes incrementally. Fifteen years ago, the thought of cameras everywhere was shocking and abhorrent. Now, there are cameras in stores, banks, on the sides of buildings, on the roads, at intersections and restaurants.

Grocery stores, along with other retailers, are upping the ante as well. Now that a large segment of the population is used to grocery store cards, other means of monitoring--to build up better profiles--are being introduced. This isn't being done for any sinister conspiracy, it's being done to build profits for corporations.

The Klever Kart is one of the more intrusive tools that are being developed in order to "serve you better". The Klever Kart has a screen mounted on the shopping cart to flash ads at you while you shop, and also allows constant monitoring of your location the entire time you are in the store. Every aisle you go down, and how long you spend there is noted. Of course, all of this data would be stored in the grocery store database and potentially available to third parties.

Biometrics are also being introduced in many grocery stores: turn over a thumb- print in order to pay for groceries. In the near future, it's going to be become very difficult to assert that it wasn't you who bought that pregnancy test kit, those cigarettes, or that Playboy magazine. And just think of the data-mining and profiling possibilities!

Personally, when I go grocery shopping, I never use loyalty cards, or credit cards, it's cash only for me. Grocery stores are quick to point out that we always have the option to pay with cash--no one is forcing us to use cards, but if we don't complain about cards now, it won't be long before the choice is gone.

What You Can Do

Sum Don't shop where the grocery store has a card. Complain to the manager--in writing.
Sum Do shop at stores that don't have cards. Let them know that you appreciate their no cards policy.
Sum Write or call to your state legislators and tell them that stores should be prohibited from collecting personal information as part of the card application.

* Please note, I'm a lawyer, not a mathematician.

Deborah Pierce is the founder and executive director of privacyactivism.org, which has its headquarters in Bellevue. She spent the last four years as a staff attorney at the Electronic Frontier Foundation, www.eff.org. To contact her, send e-mail to editor@seattlepress.com, attention Deborah Pierce.

Reader Comments

Discuss this article in the forums!


Anonymous	Jul 26, 2002
"Sum"one needs to use a spell-checker.


Anonymous	Jul 27, 2002
Excellent article! Far too many of us have been duped into believing that we're getting a great deal with these store cards. I'm glad to see some light shed on this seemingly innocuous means of intruding on our privacy. Ms. Pierce confirmed what I've always suggested--we're giving up our privacy for a pittance. I also appreciate her suggestions/steps to take, and the fact that there is a group which has organized to counter some of "Big Brother's" activities. Too many of us just throw our hands up in disgust and figure we can't do a damn thing. We can...so let's act!


Anonymous	Jul 27, 2002
Excellent article! I appreciate the inclusion of the surveys on loyalty cards. I've always suspected, like Ms. Pierce suggests, that the money we would supposedly save by apply for these things is just not be worth it. I also appreciate Ms. Pierce's suggestions at the ends, and the mention of her organization. Too many of us just throw our hands up in disgust, figuring we're too powerless. It's important for us to realize that our voices do count if we stay informed, active. The "Big Brothers" of the world relish the apathy of the masses...let's not give them that pleasure--or the power to intrude on our privacy.


Ashley Pendragon	Jul 27, 2002	California	Software Engineer
That's funny...my spell checker says that "Sum" really is a word!


Manfred Triebler	Jul 27, 2002	W-Australia	retired service technition
Dos my comment go into a data bank too?


Jill Young	Jul 28, 2002	North Carolina	Mother
I rather like the idea that my grocer can start to cater to my indiviual needs. I like getting offers and deals and am glad that I don't get offers for diapers any more, now that our kids are grown. We're living in the 21st Century and that's fine with me.


Darlene	Nov 29, 2002	Rhode Island
Yes, I also like having loyalty cards. They have these cards for us, so that we get benefits when we shop with them. If you wanted something at a drugstore, would you pick Walgreens or CVS? They're the same price, but CVS sends you a check in the mail every so often for the business. You spend the same amount, but get rewards at CVS. And people say that they track our purchases with the cards, but any store with a scanner can record or purchases also. Something to think about..


Mr. Knowitall	Dec 19, 2002	Office	Industry observer
You are wrong to say that retailers only need scanner-based sales data to optimize their mix of products and prices. Studies have shown that a small percentage of loyal customers are responsible for a large share of a retailer's sales. By learning more about the tastes and preferences of those loyal customers, they aim to increase sales and profits. They also want to keep those customers happy while discouraging the "cherry pickers" that come into the store to buy the deep discount items only.


Anonymous	Jan 28, 2003
I would like to respond to Mr. Knowitall. First of all, while there may be a large chunk of loyal shoppers, most people will and do shop at multiple locations. So I bet this pool of loyal customers is not as large as one may expect (or say exclusive customers here perhaps). Also, about the "cherry pickers" I can easily get a customer card and simply go through cherry picking the savings with the customer card regardless of my shopping frequence at any particular store. To get the discounts you only need to have the card, not use it every day.


tom	Aug 13, 2003	new york	manager
I think this issue should be left to the shoppers who knows how to shop and where to shop. What you have is your opinion and you are trying to influence the people just as the retailers. I don't see any difference.


Ben	Nov 14, 2003	England	School kid
I think this information is useful but you are too biased as Tom the manager said. You should give people the information and let them decide like I have to do in a report I have to do on this issue. People probably already know all this as well. SAVE THE CRYPT SCHOOL!!!!!!!!!!!!!!!!!!!


leanne portee	Jan 15, 2004	brixton


Anonymous	May 27, 2004	Ga,USA	Housewife
In response to "loyal customers" I used to be one in as far as -I shopped at two stores -depending on which town I was in. One of the stores started the "Advantage Savings" cards, so I rarely shop their anymore. It offended me that as a loyal customer of every week on average spending around $120 that i had to recieve a special card to get the savings-I show up with the money at that sore as opposed to the one across the street-I should get the Savings without them having all my personal info and not really saving me much.


devon	Feb 16, 2005	santa barbara, calif.	college student
I have a simple solution to the loyalty card problem. You can get the savings without giving your info -- just write down a fake name and fake address. Even something as obvious as "John Doe, 123 Fake Street." It's not lying, it's protecting your self. Believe me, the checker won't care and it's not like they are going to say you can't use the card. No one will notice.


Jim	Apr 04, 2005	Florida	Retired
The answer to these loyalty cards - is - I hate to say it - LIE! Give out fictitious information on the application. Jim


Kevin	Apr 13, 2005	Florida
No way... You are a lawyre and you don't know how to spell the word "some" (sum) ?


Meenu	May 11, 2005	Florida	Trainer
I actually came to this site looking out for more stores tht give out such cards. Ha ha ha. These cards r fun, dont u guys like seeing somethin in the mail, evry now n then??


Denzien	Oct 05, 2005	Louisiana	Software Development
"Sum" isn't short for "Summary"?


Anonymous	Jan 10, 2006	NYC
of course sum is a word what do you use in math duh


Ian tustin	Jan 10, 2006
brill


Tam	Jan 30, 2006
I've left groceries in my shopping cart and also left bagged groceries when the store refused to use their own "courtesy" card. I hate those cards and insist on remaaining anonymous during shopping. My newest methods for getting the sale price is to request the cashier look up my card but I give info on someone I know that shops there- works everytime, and I have "inherited" family members cards. I always pay cash for my purchases. I don't like being tracked.


Glenda	Mar 06, 2006	Ontario Canada	retired
I am amazed at the number of people who are not concerned about losing their freedom and will eventually be under the control of the large corporations, who will decide what is good for the masses, by monitoring a few.


Todd	May 07, 2006	Pennsylvania
Any store that DEMANDS a store loytalty card in order to give the best price when you don't want to is forgetting about customer service.


Editors Note	Jul 27, 2006
The word "sum" should actually be a bullet * It looks like a translation error in pasting text from a word processor to the Web. We will leave it unfixed for historical context.

You may discuss this article in the forums!

Law & Technology

Grocery Store Loyalty Cards: The Bigger Picture

By Deborah Pierce

Reader Comments