British retailer Tesco launches a new and paying loyalty scheme, Real does the same thing in Germany, and Casino already did the same in France. Belgian Delhaize is also experimenting with innovative concepts: are traditional retailers going Amazon Prime-style?
From discount card to subscription
Nineteen million British Tesco Clubcard holders have recently been able to upgrade their account to a Clubcard Plus subscription. The subscription costs 7.99 pounds (9.5 euros) per month, and in return they receive loyalty points that can be exchanged for money-off vouchers, as well as a 10 % discount on two shopping trips of up to 200 pounds (230 euros) per month. This amounts to saving a maximum of 40 pounds per month (46 euros). In addition, they receive a 10 % discount on certain Tesco brands in-store, and they can double the data volume of their Tesco Mobile smartphone subscription. They can also apply for a Tesco Bank credit card without any exchange rate charges.
With this remarkable move, Tesco is mainly aiming to curb the growing market share of Aldi and Lidl in the United Kingdom. Both hard discounters do not – yet? – have a loyalty scheme, because such a complex approach does not fit in with a budget-conscious organisation, which mainly aims to be lean and mean. However, Lidl is now spreading its Lidl Plus loyalty app in various European countries.
Like Prime?
Of course, a paid subscription like this is a barrier for shoppers, but with a calculated approach they can make a decent profit – they buy enough, of course. This way, the retailer hopes to better hold on to its customers: the reasoning behind this is that they will be tempted to spend more and be less inclined to visit the competition – a double gain when it comes to increasing market share.
The idea is not entirely new: Amazon has had a Prime subscription for a long time. It offers customers several advantages: Prime Video, premium shipping options, photo storage space and earlier access to flash offers. This subscription currently costs 5.99 euros per month in the Benelux. In the United States, Amazon has just added free delivery of groceries via Amazon Fresh to the plan. Those with a Prime subscription will, therefore, be inclined to make more purchases via Amazon. The Select subscription to bol.com is somewhat similar: it entitles subscribers to free delivery and exclusive offers – for only 6.99 euros per year.
Paying for discounts
This approach could be lucrative: according to Barclays analysts, the Clubcard Plus subscription could lead to an increase in turnover of up to 2.5 % for Tesco – a huge deal in a flat and highly competitive market. The impact on profit is more difficult to estimate, but a similar initiative by the French hypermarket chain Géant Casino looks promising: this retailer launched a paying version of its Casino Max loyalty app in June this year. Customers pay 10 euros per month and receive a 10 % discount on their shopping in exchange. Around 100,000 customers have already subscribed, and they are buying more than before, says Cyril Bourgois, who is responsible for the company’s digital transformation, to LSA.
The German Real chain is also launching a Prime inspired scheme, Real Pro, in several states: for a fee of 69 euros per year, members receive a 20 % discount on the FMCG offer and a 10 % discount on alcohol. According to the chain, this can generate up to 29 euros in profits per month. There are a few conditions: already discounted products do not count, different rules apply to webshop and the offer only applies to individuals, not to businesses. The retailer says it wants to reward its most loyal customers this way. Analysts suspect that customers who start a membership will save themselves the trouble of comparing prices – Real is not exactly the cheapest chainon the German market…
Innovative strategies
For the time being, these are the only European retailers with a paying loyalty scheme, but other supermarket chains are also working on improving their concepts. Just think of the functions the Belgian Colruyt Group added to its Xtra app, for example. An original idea of Intermarché in France: its (free) loyalty card gives customers a 5 % discount on fruit, vegetables and organic products of their own brand during the first three visits of the month and 10 % from the fourth visit: a strategy to get customers to come back more often.
Also worth mentioning is the approach that Delhaize recently launched in Belgium: shoppers receive a temporary 20 % discount on healthy products with the nutri-score A and B, with a maximum discount of 30 euros per month, provided that they register their Plus card online. This enables Delhaize to offer these customers personalized eDeals based on their shopping behaviour. In any case, this is much smarter and efficient than the generic 0.5 % discount that an average loyalty card provides nowadays. This concept seems to be a thing of the past: retailers now realise that it is time for customer loyalty 2.0.
