Early indications on social media are that the changes to the most popular customer loyalty programme in the country have not been well received.
Smart Shopper, which was launched amid much fanfare in 2011 and which was considered to be one of the more generous retail loyalty programmes, played a critical role in Pick n Pay’s turnaround by helping to lift top-line performance almost immediately. But it was less helpful to the bottom line.
From the start, management dismissed suggestions the programme was too generous to be affordable on a sustainable basis.
Sasfin Securities’ analyst Alec Abraham questioned the perception that the programme was overly generous. From the company’s perspective it not only drew in more customers, but provided critical stock-management information, he said. “The number of members was well above what management expected, but the rewards was a small price to pay for all the information the programme generated,” he said. The information was particularly important to Pick n Pay as it was in the process of switching to centralised distribution.
The overhaul — implemented last week with no fanfare — comes just weeks after the company said it was making R500m in price cuts on 1,300 items. Analysts say retailers are caught between offering discounts in tough economic conditions and protecting margins.
David North, group GM of strategy and corporate affairs, said on Monday that the group’s recent initiatives demonstrated the group’s commitment to giving customers more value.” When looking at the changes to Smart Shopper, customers can be assured that every rand and more is being given back to them through lower prices and more and better discounts.”
From March 30, Smart Shoppers need to spend R200 to get back R1. The previous rate was R1 back for every R100 spent, cutting the cash-back rate to 0.5% from 1%.
Management said a key feature of the overhaul would be weekly personalised discounts tailored specifically to individual Smart Shopper based on shopping habits. “With the new Smart Shopper, Pick n Pay will be offering 30-million personal discounts every week or three discounts per customer every Thursday for 10-million customers,” the company said.
The aim is to give customers more than R500 in personal discounts over the year.
Smart Shopper points already awarded are unaffected.
While shoppers are likely to be unconvinced by the touted benefits, investors appear happier. After closing weaker on Thursday and Friday, in line with the market, the share price closed firmer on Monday.
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