Fresh & Easy Plans Loyalty Test

EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market here said last week it plans to test a loyalty-card program later this year. The card similar to Tesco's Clubcard will be introduced at seven stores in the Bakersfield area in the fall and, if successful, will be expanded chainwide in March. Like Clubcard, it will use a digital points-based program in which customers earn one point for every dollar

EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market here said last week it plans to test a loyalty-card program later this year.

The card — similar to Tesco's [4] Clubcard — will be introduced at seven stores in the Bakersfield area in the fall and, if successful, will be expanded chainwide in March.

Like Clubcard, it will use a digital points-based program in which customers earn one point for every dollar they spend at Fresh & Easy — points that can be accumulated and later used in lieu of money for store merchandise, the company explained.

Cardholders will also receive personalized emails biweekly with updates on points earned and coupons that can earn them additional points, the company added.

The special offers will be made only to cardholders, with shelf prices at the stores the same for all customers, which are the norm in the United Kingdom, sources there said.

An observer there told SN he's not sure how much impact the card will have on Fresh & Easy's business, “but it's certainly worth a try.”

“[Tesco Chief Executive Officer] Philip Clarke has made a big point of leveraging scale and skill, and it would not make sense to give up on the U.S. — if that is what ultimately happens — without at least trying it.”

The card program will be called Friends of Fresh & Easy — the name of an email program introduced in December 2008 that gives loyal customers exclusive news and information about the company, along with coupons and special offers. Fresh & Easy said it has 360,000 email “friends.”

“We wanted to create a program designed to thank our customers for being our friends,” said Tim Mason, Fresh & Easy's president and CEO. “This model for Clubcard will work well for our U.S. customers.”

Fresh & Easy will work with the U.K.-based division of Dunnhumby, as Tesco does, to analyze shopper data; the U.S. arm of Dunnhumby is jointly owned by Kroger Co., Cincinnati, which competes directly with Fresh & Easy.

In an interview with the Financial Times of London, Mason said the decision to offer a card does not represent a strategic U-turn for Tesco's U.S. business. “Clubcard has always been the icing on the cake, not the cake itself, so you have to have an established business that is delivering every day for customers before introducing it,” he explained.

Mason also told the Financial Times the introduction of the card was not “[a] last roll of the dice” for the 176-store chain, which has been losing hundreds of millions of dollars.

According to a U.K.-based source, the cost to Tesco of introducing a card in a new market like the U.S. is estimated to be between half a million British pounds and 1 million pounds, or between $800,000 and $1.6 million.