"You can't buy loyalty with plastic points," Asda CEO Andy Bond said just a few weeks ago.
However, The Grocer can reveal that the retailer considered introducing a loyalty card similar to Tesco's Clubcard three years ago when Doug Gurr joined as strategy director from McKinsey.
Gurr made the case that retailers introducing a loyalty scheme tended to get a 4% to 8% sales uplift in the first three to six months, according to sources close to the business. But the proposal was vetoed by both Asda and Wal-Mart on the grounds that neither the cost nor the change in strategy could be justified, claimed the sources.
"You always get this uplift because staff get behind it, people get excited, they want to use their new card, it's a lot of hype," said Peter Maloney, chief executive of loyalty company Clear Cell and former professional services director of Dunnhumby. "But I don't think Asda could culturally do it."
Wal-Mart "ruled it out", added another source. "It had trouble making the business case work because it has to be revenue-enhancing," she said. "If you believe customers are loyal because of low prices, what additional benefits will it bring?"
Concerned about their lack of customer data compared with rivals, the two had, however, initially been interested. Tesco's meteoric rise in the 1990s has been attributed in part to Clubcard, which has allowed it to spot changing shopper behaviour and launch ranges such as Tesco Finest.
Wal-Mart is now assessing how to exploit the data it does have. According to a board member from a rival, Wal-Mart's US arm has started to harvest credit card details to identify trends. 'Data segmentation' was "a blunt instrument", he said, but better than nothing.
Asda declined to comment on details but said it considered loyalty cards undemocratic. "They're based on conditional selling and only reward people that spend the most. At Asda we reward customers with the lowest-possible prices everyday. That's why more people than ever are choosing to shop at Asda."
Read more
Clubcard 1 was Tesco’s Lethal Weapon. What of the sequel? (analysis; 22 August 2009)
However, The Grocer can reveal that the retailer considered introducing a loyalty card similar to Tesco's Clubcard three years ago when Doug Gurr joined as strategy director from McKinsey.
Gurr made the case that retailers introducing a loyalty scheme tended to get a 4% to 8% sales uplift in the first three to six months, according to sources close to the business. But the proposal was vetoed by both Asda and Wal-Mart on the grounds that neither the cost nor the change in strategy could be justified, claimed the sources.
"You always get this uplift because staff get behind it, people get excited, they want to use their new card, it's a lot of hype," said Peter Maloney, chief executive of loyalty company Clear Cell and former professional services director of Dunnhumby. "But I don't think Asda could culturally do it."
Wal-Mart "ruled it out", added another source. "It had trouble making the business case work because it has to be revenue-enhancing," she said. "If you believe customers are loyal because of low prices, what additional benefits will it bring?"
Concerned about their lack of customer data compared with rivals, the two had, however, initially been interested. Tesco's meteoric rise in the 1990s has been attributed in part to Clubcard, which has allowed it to spot changing shopper behaviour and launch ranges such as Tesco Finest.
Wal-Mart is now assessing how to exploit the data it does have. According to a board member from a rival, Wal-Mart's US arm has started to harvest credit card details to identify trends. 'Data segmentation' was "a blunt instrument", he said, but better than nothing.
Asda declined to comment on details but said it considered loyalty cards undemocratic. "They're based on conditional selling and only reward people that spend the most. At Asda we reward customers with the lowest-possible prices everyday. That's why more people than ever are choosing to shop at Asda."
Read more
Clubcard 1 was Tesco’s Lethal Weapon. What of the sequel? (analysis; 22 August 2009)
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