Call me loyal
Say you like a certain store – perhaps a supermarket, clothing retailer or bookshop – and it’s possible to sign up to its loyalty scheme for discounts and rewards for shopping there. Is it worthwhile?
The answer will probably depend on the deal offered, how much effort the shopper wants to commit to claiming it and other factors (including the privacy concerns some have about sharing their personal information and spending habits with companies).
But shoppers should beware that these incentives to “save” can sometimes turn out to be excuses to spend.
Around the world in loyalty cards
In Germany, a study of supermarket shoppers found bonus programmes had “high impact” on behaviour and attitudes – but attractive offers were critical.
Research from the Austrian Central Bank found the overwhelming reason for signing up for loyalty cards was the prospect of instant rebates (cited by 90% in its study). It found three-out-of-four Austrians held at least one loyalty card in 2008, with an average of five cards per cardholder.
In India, research found “moderate” satisfaction with loyalty cards and concluded that the Indian retail industry should revamp and localise the model operating in Europe and elsewhere.
We spend on cash and cards differently
It sounds obvious but shoppers should be wary of spending money with the sole purpose of getting a reward. It is likely that what’s on offer will not be worth the outlay. In these circumstances, an incentive to save becomes an excuse to spend.
Be aware too that it might feel easier to spend on store credit cards than spending cash. Many studies show that handing over cash feels more real than swiping plastic.