Broken Secrets

Coupons You Get at Grocery Stores are Based on Your Purchases

June 22, 2010 at 8:16 am Chad Upton 3 comments

In the United States it is very common for supermarkets to offer discounts to shoppers who present their loyalty card at the checkout. Price tags in the aisles often quote two prices, with and without the discount card.

The loyalty cards are usually provided by the retailer at no charge. However, they’re not free.

Although you don’t pay any money for these cards, you do handover your entire purchase history at that store. Your information is often used immediately at your time of purchase to determine which coupons should be printed out for your next visit.

Marketers frequently target consumers who buy their competitors products. For example, if you frequently buy Uncle Ben’s Rice, you may get a coupon from Rice-A-Roni. The manufacturer is trying to entice you to buy their brand the next time you shop.

Purchase history may also be used to determine the dollar value of the coupons you receive. For example, if you normally buy Dannon yogurt, then Yoplait may offer you $0.50 off your next Yoplait purchase. If you’re already a Yoplait customer, you may only get a $0.10 coupon or none at all.

Obviously, you don’t need a loyalty card for the store to recognize that you’re buying Uncle Ben’s today, but it is important if they want to know if you have bought that brand before or if you typically buy another brand.

When you sign up for a loyalty card, you often fill out a short survey of personal information, including your home address. They say they want your address so they can mail other offers to you, which they may. More importantly, your address allows them to understand a lot about you, including the average income of your neighborhood and even how much you paid for your house. In some cases, these programs are run by outside companies. Your address will help them combine your shopping information from multiple stores, assuming you always use the same name and address.

By comparing your personal information with information about other people’s shopping habits, average income and other demographic information, they can predict which products you’ll most likely try if they provide a coupon a for it.

Many stores will give you their loyalty card and let you use it right away, then they send you home with a survey to fill out and mail in to register for the card. I can tell you from experience that you can use your loyalty card for years without ever mailing the survey in. Although they’re collecting your shopping history, they don’t know much else about you.

There are also studies that show stores with loyalty cards don’t always have the best price, even when you use your frequent shopper card. In fact, one study even showed that sale prices went up after the introduction of a loyalty shopping card. It’s a good idea to keep track of the prices of a few items you commonly purchase to see if the regular price is better at other nearby stores.

I usually shop at a co-op, which does not use a loyalty card but has better prices than any other store around. They even have better prices than Target on items that they both carry, although that is one of the few places I cannot use my credit card to get cash back — they only accept cash or debit, one way they try to keep their costs down.

It’s not just grocery stores that provide you with sponsored coupons. I stopped at target yesterday to pick up some envelopes, on my way to the cash I spotted a new iced coffee drink. From other posts, you know I am addicted to coffee, so I couldn’t resist. At the register I was given a $7 off coupon for Crest Whitening strips. I doubt the envelopes triggered that.

Broken Secrets | By: Chad Upton

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Sources: Seattle Press, No Cards, an Industry Insider

Entry filed under: Be Frugal, Demystified, Food and Drink, Hacks. Tags: card, coupon, grocery, loyalty, shop, store, value.