WHILE ITS RIVALS in the supermarket industry and other channels of trade are excited over the possibilities inherent in forging deeper relationships with customers who carry their loyalty cards, will Wal-Mart Stores be left behind? Or would the world's largest retailer introduce a loyalty program as a means of rebounding for a two-year U.S. sales slump?
Though there has been no indication from the Bentonville, Ark.-based retailer that it would consider such a program — and in its recent emphasis on reestablishing EDLP as its same-store sales savior indicates it is highly unlikely it would be adopted — at least one industry observer suggested it might be time to try.
“I would acknowledge that there needs to be a different way of [Wal-Mart] getting a value message out, and institute a loyalty program,” Dave Marcotte, director of retail insights at Kantar Retail, told SN in an interview earlier this year. “That violates all the religions of EDLP, but it's time to get over it. They could do it tomorrow.”
Marcotte said he could envision Wal-Mart using such a program to make a powerful statement of shopper savings on register tape. Insights gleaned from the data in the meantime could only help guide the company regain sales momentum.
Despite the doubtful nature of Marcotte's suggestion becoming reality, observers contacted by SN acknowledged potential upsides for Wal-Mart. Its largest discount rival, Target Corp., has said it was seeing benefit from its Redcard shoppers, and Wal-Mart's Sam's Club (the star of its U.S. portfolio lately) and financial services division are no strangers to the mechanisms and benefits of membership.
A gas-discount program for Wal-Mart gift card holders run through Wal-Mart this summer helped spark sales gains.
“The core essence, the DNA of Wal-Mart, is to be the low-price leader, and not doing a loyalty card is almost as big a part of their DNA,” Craig Johnson, president of Customer Growth Partners, New Canaan, Conn., told SN. “The caveat to that is that the financial services side is one of the real unsung heroes of Wal-Mart, and I wouldn't be at all surprised to see something happening for the Wal-Mart money card holder. You have to think they are least thinking about it.
“Sam's obviously has their programs, and with Brian Cornell doing such a great job over there with the consumer insight group, you have to think some of that could start spreading to Wal-Mart U.S.”
Bill Bishop, chief architect at Brick Meets Click, Barrington, Ill., agreed that a loyalty card would be inconsistent with Wal-Mart's approach but added that the retailer could present a more relevant offer through more analysis of its existing data.
“Personalization requires customer identification. But a lot of adjustments to the way people are shopping, and local demands, do not require personalization. You can do that just by analyzing transactions.
“It's probably too much to ask them go to personalization, it might be seen as too incompatible,” Bishop added. “But it is fair to criticize them for not mining the transaction data they have into more local and store-specific merchandising.”
For now, at least, a loyalty card is one of the things that distinguish grocery retailers from Wal-Mart, and provides a potential advantage via personalized offers, said Ken Wyker, president of Circular Logic, Charlotte.
“The grocery retailers who compete with Wal-Mart often say, ‘I have to be more like them.’ But if you have a loyalty card program you want to do what Wal-Mart is incapable of doing,” Wyker said. “They can't personalize the way a grocery company can.”