What Does Your Supermarket Know About You? | Company Activities & Management > Company Structures & Ownership from AllBusiness.com
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What Does Your Supermarket Know About You?

And what’s it doing with the information?

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We were just reading about Safeway’s new “Just for U” program. It’s an add-on to Safeway’s longstanding Club Card loyalty program. With Just for U, Safeway Club Card members can get extra discounts on items they’ve bought before and on items they’re likely to buy in the future, based on the items they’ve bought before. So if you buy corn chips today, Safeway might offer you a Just for U discount on Cheez Whiz tomorrow.
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Great, right? Or is it? Did you ever wonder what supermarkets like Safeway do with all the data they collect on your purchases? Obviously they use it to offer you discounts. But what else do they do with it? Oh, just sell it to third parties (like maybe health insurers) who might have an interest in the things you buy regularly (like maybe beer, cigarettes, and Molten Hot Wings Ruffles).

Yeah, we know: Most of these loyalty programs have privacy policies, and they promise not to sell your information. But the policies have fine print like this (from Safeway): “We may share personal information with our affiliate companies or in the course of an actual or potential sale, reorganization, consolidation, merger or amalgamation of our business or businesses.” That’s how, when Winn-Dixie went bankrupt, customers’ pharmacy records were sold to the highest bidders. CVS bought the records from 62 stores for $6.4 million, Eckerd purchased the records from 20 stores for $2.7 million, Kroger paid $1.47 million for 12 stores’ records, etc. (So next time you go to buy that mineral-oil enema your doctor recommended, don’t use your club card.)

What else do supermarkets do with your data? Yeah, we know: We’re not all that worried about data on our shopping habits, either, because we don’t buy beer, cigarettes, and Molten Hot Wings Ruffles at Safeway. (For those we go to our friendly neighborhood liquor store.) But here’s the really annoying part about these supermarket loyalty programs: The people who get the best discounts are the people who don’t need them.

“The whole point is to give the best shoppers something special--and you have to pay for that out of something,” an exec at Catalina Marketing, a company that runs a lot of loyalty programs, told Smart Money magazine awhile ago. “It used to be that everybody got Rice Krispies for, say, 79 cents. Now they’re available to anyone for 89 cents but the best shoppers get them for 49 cents.”

Supermarkets want to keep their “best shoppers” happy because a study a few years ago found that a typical supermarket makes 75 percent of its profit from just 30 percent of its customers. Here’s how the managing director of Customer Retention Assoc. put it a few years ago, when a lot of loyalty programs were being built: “Bottom tiers of customers should receive less or no investment. Some might even have to be discarded if the company is to concentrate its resources on retaining profitable customers.”

That sort of blunt retail speak is sort of funny, though it’s less so nowadays, with the economy dry heaving and The New York Times reporting that Walmart shoppers have so little spending money they buy food and not much else.

But wait. There’s more. Of course, credit card companies already know what you buy with your credit cards (which for most people is most things) and downgrade your credit rating if they disapprove of those things. Annoying, right? Well, wait till everyone is paying with a mobile phone. We won’t go into detail but just think middle finger and latex glove. Google is already the leading player in this field and what Google wants is not a few cents per transaction -- it wants your data. “They get very, very granular information pertaining to what you buy and when you buy and that information is gold,” Nick Holland, senior analyst at tech research firm Yankee Group, tells Huffington Post. “In one fell swoop they’ve trumped anything from Foursquare or Groupon. Now Google owns location-based advertising in the physical world.” (Google owns everything anyway. We might as well get over it.)

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