Tom Thumb Battles Recession with Loyalty Program

Retailers don’t always get the most out of technology, preferring to stick with old methods and not taking full advantage of what’s possible, but a crisis like the recession can get the once reluctant thinking about how to get more out of what tools they have, and that can be both a short- and long-term benefit, said Chris Curran, chief technology officer, Diamond Management and Technology Consultants.

Curran said retailers often underutilize technology they’ve already installed and he suggested that, in the current recession, smart retailers can turn to loyalty programs to improved performance.

Curran noted that supermarket operator Tom Thumb has expanded a loyalty program that provides its customers with benefits not only from grocery purchases but also for what they spend on prescription medicine and gift cards. The bonus for gift card purchases doesn’t just cover the Tom Thumb version but those from other stores that the supermarket sells as part of its Gift Mall display, where Best Buy, iTunes and Home Depot all have offerings.

Rather than cents off, the Tom Thumb loyalty program provides credit for gas purchases. As Tom Thumb operates in Dallas/Fort Worth – certainly a metropolitan area where folks rely on their cars  — the break on gas is a benefit the has meaning for the customer, particularly when money is tight.

Often, loyalty programs are launched with great fanfare. Shoppers who sign up and use their loyalty cards at checkout initially receive sales receipts peppered with little rewards that add up to a nice bonus whether in a benefit like free gas or a discount from the total bill. Unfortunately, retailer focus on the loyalty program can diminish over time, and although checkout clerks will continue to ask for the associated card, as retailers still want the shopping data that it generates, the rewards part often falls off, which inevitably translates into disappointed customers.

Yet, Kroger’s work with Dunnhumby USA is creating new standards for loyalty card operations. Home Depot, which recently said it would revisit technological initiatives to improve performance in the recession, has signed up for Dunnhumby services. Macy’s has, too.

Curran said retailers who revisit loyalty card programs and determine how they might better serve customers in the recession can establish the emotional bond between store and shopper that was supposed to be one of the primary goals. Besides, disappointed shoppers will use their cards less often, so the whole data collection function is undermined, and the retailer will fall farther behind Wal-Mart, Kroger and other top retailers that are conspicuous in their  information processing and application efforts.