SUPERVALU INC. (SVU), The Kroger Co. (KR): Can Grocery Stores Survive Without This Key Marketing Tool?

Page 1 of 2

The fallout from the National Security Agency’s massive spying program on the American public — and on foreign, friendly nations — continues to mount. The idea that the government is compiling dossiers of every phone call you make, every email you write, every text you send is chilling in its Orwellian breadth.

Similarly, Facebook Inc (NASDAQ:FB)‘s acknowledgment that it creates “shadow profiles” of its members — that it takes the information you voluntarily provide it and trolls the Internet to gather even more information about you that you didn’t authorize it to have — and then accidentally revealed it all, has led more than one person, myself included, to cancel their Facebook account.

Increasingly, individuals are worried about personal information being stored in databases that are subject to hacking or simply sloppy coding, and things that once seemed innocuous, like what you buy at the local supermarket, now can be viewed in a more sinister light.

While supermarket titan Albertsons hasn’t said so, its decision to eliminate loyalty cards at all of its grocery stores could become a key marketing advantage if it frames its decision in the right way.

SUPERVALU INC.

Bought out earlier this year from SUPERVALU INC. (NYSE:SVU) by private equity firm Cerberus Capital Management, Albertsons has decided to forgo compiling individual customer shopping habits through loyalty cards at all of its brands, including Acme, Jewel-Osco, Shaw’s/Star Market, and its namesake stores. Shoppers might not be aware of the treasure trove of data contained in those plastic store cards you swipe at the beginning of your checkout procedure, but they’re a marketer’s dream.

Albertsons decided that rather than give special pricing to loyalty card holders, they will give everyone the same low everyday price. At a time when SUPERVALU INC. (NYSE:SVU) and The Kroger Co. (NYSE:KR) are accelerating their efforts to create more comprehensive loyalty systems as a means of fending off not only the likes of Wal-Mart Stores, Inc. (NYSE:WMT), but also Amazon.com, Inc. (NASDAQ:AMZN), which has entered the grocery aisle, does taking a step backward, as Albertsons is seemingly doing, mean it won’t be able to effectively compete?

As with most things, it depends. While Albertsons won’t be able to customize a shopping experience or push particular items to customers — as The Kroger Co. (NYSE:KR) might, with its new smartphone app that will be tied to its loyalty card — management says data gathered on the individual level is not as important as knowing what to sell in a particular neighborhood.

And there are examples of grocery chains that don’t have loyalty cards that thrive as well as survive. Most notably, Whole Foods Market, Inc. (NASDAQ:WFM) engages its customers in other ways without the need for any Big Brother database. While that might be more the exception rather than the rule because it’s something of a niche player, the organic grocer does show it needn’t be a fatal flaw to forgo the loyalty card.

Yet there are risks inherent, because shoppers do become attached to certain ways of doing business. When J.C. Penney Company, Inc. (NYSE:JCP) abandoned its “doorbuster sale” policy for everyday low pricing, believing consumers would be wise enough to understand they were getting a better deal, the venerable department store chain was brought to its knees as it learned that, no, shoppers really do prefer the illusion of a sale. They want to be fooled into thinking they’re getting a better price, and they abandoned Penney in droves. While the store quickly raised the white flag in defeat, it’s still not certain it will be able to survive the mass defections the policy change wrought.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!