Picture: REUTERS/Mike Hutchings/File Photo
Picture: REUTERS/Mike Hutchings/File Photo

Most major retailers have had a loyalty programme in place for some time. One of the last to introduce one is Checkers, which recently announced the launch of Xtra savings programme.

There are some advantages to biding one’s time, believes Eighty20’s Steven Burnstone. He points out that Checkers has had the luxury of learning what works and what doesn’t work in the SA market before implementing its own programme.

Sometimes being the first to market is not always the best strategy. The Shoprite group, which owns Checkers, has traditionally positioned itself as an EDLP (everyday low-price) chain, saying that it will not implement a loyalty programme. Its entry is an acknowledgement that loyalty is an essential component of the broader customer proposition. Businesses without a loyalty offering are missing out,” he says.

The programme is designed for customers to be identified so Checkers can see what they are buying. This can be very valuable in driving retention and growth in customer spend, pricing and a promotions strategy, increased funding from suppliers as well as buying and merchandising efficiencies, Burnstone says, adding that it will be vital for Checkers to ensure it uses the data and insights it gathers effectively in order to drive this improved performance.

The launch of the Xtra Savings programme is being seen as part of the retailer’s broader strategy to enhance the Checkers brand to compete with Woolworths and Pick n Pay. Burnstone believes the programme has a great deal of potential.

The big take-out

The Checkers Xtra savings programme shows great potential for success, provided the retailer is able to maintain its offers and make effective use of the data it gathers to drive performance in the long term.

He argues that many players in the loyalty space are moving away from points-based systems such as those used by Pick n Pay’s Smart Shopper, as they are expensive to maintain (large balance sheet provision is required) and the perceived value by the customer is often low. A case in point is the fact that Pick n Pay in 2017 reduced its points system from 1% to 0.5% and last year started expiring points older than 12 months, providing even less perceived value for customers.

“It’s more effective to discount items in the shopper’s basket as the Checkers programme does. This not only drives customers into the store to buy specific items, it also provides the opportunity for increasing spend on other items they see once they’re in store,” he comments.

Burnstone says the question retailers should be asking is not: “Should we have a loyalty programme?” but rather: “How do we get our loyalty programme right?”

“The question about Checkers is whether it will be able to maintain these offers in the long term and introduce innovations such as personalisation to retain consumer interest and drive desired behaviour,” he says.