SEARCH:     The Web


  Tell me how to:
  Buy a subscription
  Buy a print ad
  Buy an online ad
  Reach newsroom
  Reach web staff
  Write to the editor
  Set my homepage


Consumers' group blasts loyalty cards; grocery stores defend programs

By CINDY VAN AUKEN Tribune-Herald staff writer

Grocery stores that claim their loyalty card programs give consumers a better deal than their competitors often don't live up to their promises, according to a national consumers group and research done by the Tribune-Herald .

The special prices that consumers get when using loyalty cards are often the same or even higher than the prices found at stores without the card, research shows. Even worse is that shoppers who don't use the card often end up paying 25 percent to 60 percent more for products than they would at a competitor.

Not only that, but shoppers are paying the higher prices only to have their privacy invaded, according to a national consumers group. Since each and every item purchased with a card is recorded, the loyalty programs supply the stores with a wealth of intimate details about customers. Stores that promote the cards as an easy way to save money are not telling the whole story, the group said.

"Begging the powers that be to issue me a document to buy affordable food ... is very disturbing to me," said Katherine Albrecht, director and founder of a 1,000-member group called Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN). "(The loyalty card programs) can be good if you are someone who spends a huge amounts on groceries and fit into the top 10 percent of shoppers. But if you're not in that 10 percent, or God forbid, you are poor, the supermarket card is the worst thing that ever happened to you."

The first store in the Waco area to implement a loyalty card program was Brookshire's Food Store in February 2001. The store, located in Robinson, calls its program the "Thank You Card."

In early November, Albertson's started its "Preferred Savings Card" program in the 137 stores that fall under its Dallas division, which includes Waco. Although the launch was designed to be a test pilot, company officials said they plan to expand the program nationwide.

The change outraged some Albertson's customers, who said they bought the company's marketing pitch of not needing to have a card to save money. About two weeks ago, some of CASPIAN's 200 members in the Dallas/Fort Worth Metroplex held a protest at an Albertson's store in Irving because of the new program.

Albrecht said there are two main reasons she and other consumers disdain the card programs. The first reason is price. The second is a potential invasion of privacy.

When stores implement a card program, they often inflate their prices overall to make it look like customers save money when using the card, she said. But shoppers are often paying the same or even more than they paid before the program started, she said.

To prove that point, a CASPIAN member in Indiana compared the prices advertised in sales circulars just prior to and just after Kroger's stores there implemented a card program, Albrecht said. The study found that the majority of the prices stayed the same and that nearly twice the number of products were actually more expensive with the card than cheaper.

"What used to be a sale is now supposed to be some kind of special discount," Albrecht said.

Whitney Kelley, a CASPIAN member and Dallas resident, has stopped shopping at Albertson's since the card program was implemented. But she said she has been monitoring the store's prices through sales circulars.

Kelley said she has yet to see any outstanding deals and has noticed some prices go up. For example, the price for 24 rolls of one brand of toilet paper was once $4.99 on sale, she said. To get it for that same price now, the ads say shoppers have to register for and use their card, as well as send off for a $1.00 rebate. The card price is $5.99, she said, and the regular price is now $8.50.

"If that's indicative of what they're doing, they're gouging," Kelley said.

A Tribune-Herald study of five local stores — Albertson's, Brookshire's, H-E-B, Wal-Mart and Winn-Dixie — also backed up CASPIAN's claims. To do the study, the prices of 20 items that represented some of the best deals in the Albertson's and Brookshire's sale ads were compared.

The store with the lowest overall price was Wal-Mart, followed by Brookshire's if the card is used and then H-E-B and Winn-Dixie. Albertson's finished last, even with the card prices.

At Brookshire's, customers who didn't use the card would have to pay 25 percent more, making the non-card price significantly higher than at the three non-card stores.

At Albertson's, the situation is a little more complicated. On many items, three prices are listed. There is the regular price, the card price and then the "bonus buy" price, which is a sale price shoppers can get even without the card. The difference between the card price and the bonus buy price was 14 percent. The difference between the card price and the regular price was 21 percent.

An example of the two-tiered pricing strategy is the cost of a block of Velveeta cheese. At all five stores, the labeling on the box said the manufacturer's suggested retail price was $3.99. At the non-card stores, the price for the cheese hovered within a few cents of the suggested price.

But at Albertson's the regular price for the same block of cheese was listed as $5.99, with the preferred card price being the competitive $3.99. Similarly, Brookshire's listed the regular price of the cheese as $5.59, with the card price being $3.99.

Albrecht said one of the reasons prices go up after a card program launch is because the programs are expensive. According to the supermarket industry's own trade publications, a loyalty card launch can cost as much as $30 million in the first year, with annual maintenance costs of $5 million to $10 million.

That added cost gets passed on to consumers, Albrecht said, and the stores end up profiting from the estimated 10 percent of customers who don't use a card for whatever reason. She said she is angered by the messages stores print on the bottom of receipts that say how much money a customer saved by using the card.

"It should really say, 'Congratulations. You avoided a penalty of $5 by shopping at our store, but you could have saved $2 more by shopping down the street,'" Albrecht said.

CASPIAN's members also believe card programs infringe on shoppers' privacy, Albrecht said. The major grocery store chains that have the programs record and track customers' purchases in an attempt to gain a marketing edge. Many also require shoppers to hand out identifying information such as a driver's license number or Social Security number in order to obtain a card, she said.

Although the major stores have privacy policies that say they will not sell or share customers' information with third parties, such policies are worthless, Albrecht said. All companies have to do is "partner" with other companies and they can share that information without violating their policy.

Such a partnership was forged last year whenStop & Shop, a U.S. grocery store chain, joined forces with an Internet company called, Albrecht said. Customers could go to the SmartMouth Web site, type in their card number and their most recent purchase lists would appear, with evaluations of the nutritional value of the food items. The program was discontinued because of customer backlash, Albrecht said.

Already, purchasing records have been used against consumers, Albrecht said. In one case, the federal Drug Enforcement Agency subpoenaed purchase records to see if a suspected drug dealer had bought a lot of plastic bags, which are used to package drugs. Another example is an alimony dispute where a woman used her ex-husband's purchasing records to show he had a good income because he bought expensive wine, Albrecht said.

Albertson's spokeswoman Jeannette Duwe defended the preferred card program, saying it does offer customers more savings than typical sale prices. She also said Albertson's is more concerned about value then price, which means providing a pleasant shopping experience and quality products in addition to low prices.

Duwe also said the company strives to keeps shoppers' information confidential.

Brookshire's spokesman Sam Anderson also said his company's card program benefits consumers. In addition to receiving coupons and being able to earn certificates for a certain percentage off a purchase, Anderson said customers who use the card are also eligible for special rewards.

For example, Easter lilies were delivered to the top 25 shoppers at the store last year, Anderson said. Also, customers who spent at least $30 on school supplies received $5 off on their groceries.

"While we appreciate each customer in our store, we realize there are many customers that regularly shop with us and enable us to stay in business," Anderson said. "Obviously, we want to thank these customers for their support by providing special offers and discounts."

Cindy Van Auken can be reached at or at 757-5744.



 Email this page to a friend

By using this service you accept the terms of our visitor agreement.
Registered site users, to edit your personal profile, click here.

© 2002 Cox Newspapers, Inc.
The Waco Tribune-Herald and Cox Interactive Media
NEW: Privacy Policy | About this site | Write to us