Years ago when our kids were quite young Zellers (a Canadian box store) introduced Club Z. The idea was quite similar to Canadian Tire's cash bonus money but rather than slips of money that could be used only in the store, Club Z looked like a credit card. With each purchase the card was swiped to earn points. Once you earned enough points you could redeem them. We earned enough to redeem for a huge Coleman picnic cooler and later a Bissell carpet steamer. The grocery stores caught onto this type of loyalty card, rewarding customers for shopping in their stores.
In Canada, there tends to be two types of rewards. First, if you use their credit card, you earn loyalty points on your purchases that can later be used towards the purchase of other items in their store. The Loblaws chain (eg. No Frill, Superstore, Zehrs, etc) does this through their PC credit card. The second type is a straight loyalty card similar to the old Club Z card. The Sobey's chain of grocery stores offer this type of reward system. Sobey's has also partnered with AirMiles so you can earn points in that reward program as well.
While reward programs can be quite good and you can earn enough points to get nice rewards, they are not always the frugal choice. We do use available reward programs at the grocery stores we shop at both at home and at our vacation home but we never shop for groceries simply because of the loyalty program. It is an added bonus but one that can take several months to pay-out and can ultimately cost money. Here are a few reasons why we do not make reward programs a priority when shopping:
- price - The consumer ultimately pays for the reward program. While Sobey's offers two ways to earn reward points, in comparison to the Loblaws chain that offers one way to earn points there is a considerable difference in prices. Sobey's is consistently 20% more expensive to shop in meaning every shopper is essentially paying into that reward program through higher prices. No Frills has the lowest prices and while only those with their credit card earns points the shopper without the credit card can enjoy the low prices on a regular basis without unconsciously paying into the costs of a reward program. In addition to this, grocery stores tend to be more expensive when it comes to produce, something that can be bought locally for less money.
- encourages consumerism - Reward programs are that nice little pat on the back to say thanks for being a good customer now give us more money. They are very effective at it and if it looks like the store is losing a bit on the reward program they will quickly modify the program. A case in point, Shopper's Drugs in Canada has a reward program and at one time you could earn points even on your prescriptions. The program was costing too much so they nixed earning points on prescriptions effectively making their reward program useless for many. You see, prescription are a need but pretty much everything else they sell can be found elsewhere at lower prices. Now one of the problems is some will shop specifically at one grocery store simply because of the reward program even though the prices are more expensive than the competitors'. In short, they have actually paid for their own reward via higher prices!
- the rewards - In general the rewards range from tailored to the consumer coupons based on their purchases, cash back, and tangible items including air flights. I can't find much fault in these other than coupons. I prefer the reward programs that earn cash back on future purchases because they can be combined with sales. Most tangible items can be found for less than the value of the points it takes to earn the reward.
- timing - It can take a considerable amount of time (eg. several months to even a year or two) to earn enough points for the desired reward. It is not a instant reward by any means although some programs like Canadian Tire allows you to use the reward on each purchase. It's not a lot but it can be somewhat of a savings. The thing is it really is hard to keep your eye on the reward when it take so long to earn it.