Checkers is finally in the rewards game

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Checkers rewards cards Source: Google Images

The first promo period sees just under 100 products on offer alongside its typical weekly or fortnightly promotions.

Its Xtra Savings card, launched last week, promises instant savings of up to 50% across a number of items on promotion (excluding the odd halo deal, most discounts are in the 20-35% range). The first promo period sees just under 100 products on offer alongside its typical weekly or fortnightly promotions. Included are combo or bulk-buy offers as well as more generic discount pricing on certain products at its supermarkets and Liquorshop, when swiping the card.

This makes Xtra Savings similar to the Woolworths W Rewards and Spar Rewards programmes, which offer members discounts on specific products each week.

Like Woolworths, it also allows shoppers to opt in to supporting a charity or cause beyond the instant discounts (think ‘MySchool’). For every 10 swipes, it will donate R3 to a selected charity (Lunchbox Fund, Food & Trees for Africa or NSPCA) under ‘Swipe For Good’.

All of these, however, differ from the two most popular cashback propositions on the market – Clicks ClubCard and Pick n Pay (PnP) Smart Shopper – where customers earn ‘points’ (effectively cashback) on each shop.

Checkers (Shoprite Holdings) is the last major supermarket group to roll out a rewards proposition. It piloted Xtra Savings at some Western Cape stores in 2016, before shelving the project.

Retailers use rewards programmes to fulfil two vital roles.

For customers, they provide additional incentive – via discounts or cashback – to shop at a specific retailer.

More importantly, however, they provide invaluable data to retailers about their customers (and behaviour). As rival PnP pointed out on Tuesday: Smart Shopper has provided it with seven years of data to help drive business decision-making! And this data is shared with suppliers.

This is why in certain segments (wine, baby and pets), PnP has launched opt-in clubs that offer three times the normal Smart Shopper points.

You can bet this is funded by supplier rebates, showing just how beneficial this customer-behaviour data is.

Being late to the game means Checkers has a long way to go to catch up.

PnP has over 7 million active Smart Shopper customers, meaning it knows an awful lot about these people’s purchasing behaviour. It gives shoppers back over R200 million in points each year (at a cashback rate of 0.5%), and arguably didn’t quite realise how powerful the platform and data was until a good few years in.

Clicks has 7.6 million active ClubCard members, accounting for a massive 77% of the retailer’s sales. In theory, that equates to it knowing everything it possibly can about approximately R15 billion of its roughly R20 billion in retail turnover.

Right now, Checkers has a more limited understanding of its customers (likely mostly derived data). Central to this knowledge to date is dunnhumby, a global leader in customer data science. This little-known outfit, owned by Tesco plc, established a local office in 2012 specifically for Shoprite, and is part of the team that designed the Xtra Savings loyalty proposition.

Strategic focus

Filling the gap in its limited understanding is one of Shoprite Holdings’ nine strategic focus areas for 2020. In fact, its next era of growth (2020 to 2022) is premised entirely on the “shift from explosive expansion to precision retailing”.

One wonders to what extent its major suppliers pushed Checkers in this direction.

Reading between the lines, it is possible that it decided to first complete its fundamental (and disruptive) overhaul of its enterprise IT system before it went down the loyalty programme road. Given the strength of its centralised supply chain, it needed to be confident it was ready on the planning and fulfilment side.

In its 2019 integrated report, Shoprite makes the point that: “For 40 years, our innovative, cost-conscious approach to retail has served us well. Now, with our investment in digital transformation, we can use data to embed insights and analytics into our processes, and we will enable more agile decision-making across the supply chain.

“Our state-of-the-art supply chain ensures that each store is stocked for local needs and is able to adjust promotions, pricing, formats and stock at a granular level. Going forward, we will learn more about our customers from every change we make, allowing us to improve incrementally every day.”

Shoprite Holdings has an almost unparalleled ability to roll out promotions – Checkers single-handedly launched Black Friday in South Africa and will use this to its advantage (Xtra Savings members will get to see this year’s deals early).

Simplicity

And while it won’t catch up to PnP overnight, it has another huge advantage: Checkers doesn’t have any franchise operations (which typically adds complexity). It will keep driving this centrally, like it does with any other initiative.

Checkers will learn what does and doesn’t work and can adjust the loyalty programme accordingly. Uniquely targeted rewards, such as those introduced by PnP’s Smart Shopper two years ago, will make an appearance soon.

Two years from now, the group may be surprised at how fundamentally this ‘simple’ loyalty card has transformed the way it operates – especially when it comes to more affluent customer segments.