Rhys Blakely
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A mobile phone-based loyalty scheme is to be launched across 17,000 local grocers as corner shops strike back at the supermarkets’ powerful special-offer campaigns, The Times has learnt.
In an attempt to drag the coupon culture into the digital age, the programme, called Shop Scan Save, will send special offers to consumers’ mobile phones as barcodes that can be scanned from handset displays.
Unilever, Procter & Gamble, Nestlé and Mars, the consumer goods giants, have signed up. The scheme will be rolled out in July by PayPoint, the group that supplies electronic payment systems to chains including Spar, CoOp, Costcutter and Nisa-Today’s and about 9,000 independent local stores.
The hope is to copy the success of schemes run by larger retailers. Tesco’s Clubcard is estimated to have driven more than £200 million in extra sales for the UK’s largest supermarket in the first half of its current financial year.
Consumers will opt in by texting “join” to a special number. Each time they redeem a coupon, an in-shop terminal will record other purchases made in that transaction, building a consumer profile. Then offers will be targeted at the consumers most likely to cash them in.
Shoppers will also be able to request special deals from a “smart system” designed to work out what they are looking for. A shopper who texts “BBQ”, for example, could be sent offers, within 30 seconds, for beer, sausages and salads.
Marc Lewis, founder and chairman of The Light Agency, the company that will manage the data collected and deal with brand owners, said: “In the UK, coupons are seen as fairly tacky. There is the sense that people who use them are middle-aged women, earning less than £30,000 a year. We want to attract a more attractive demographic — in particular, men.”
The Light Agency will take a fee from brand owners, a portion of which will go to PayPoint. Consumers will be charged for sending messages by their mobile operator, but not for receiving offers.
Shop Scan Save will also aim to boost groups such as Unilever, which has struggled to market its sprawling array of products. Dominic Taylor, the PayPoint chief executive, said: “This is about driving footfall to retailers while delivering benefits to brand owners.”
It is estimated that more than six billion paper coupons offering discounts and other special offers were circulated in the UK last year.
Only between 2 per cent and 4 per cent of them were redeemed and up to 80 per cent were “mis-redeemed”, with consumers receiving discounts against goods that were not eligible, resulting in losses worth tens of millions for brand-owners.
In a pilot scheme in Hull last year, Shop Scan Save achieved average redemption rates of 20 per cent. A ten-week television advertising campaign in the city delivered 13,000 users.
Supermarkets have invested heavily in loyalty schemes. Tesco’s Clubcard has signed up 11 million users since its launch in 1995, making it the largest in the UK.
Rewarding loyalty
1896 Sperry & Hutchinson launches the first stamps-based rewards programme in America. By the mid1960s the group was printing three times as many stamps as the US Postal Service
1963 Jack Cohen, the Tesco founder, signs up to Green Shield Stamps, after the idea was brought to the UK by Richard Tompkins, who went on to found Argos in 1973
1977 Tesco ditches Green Shield Stamps to fund a new price-cuts policy
1995 Tesco introduces Clubcard, now the UK’s most popular loyalty scheme, with 11 million active users
2000 Green Shield Stamps reborn as greenpoints.com
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2nDimension in cooperation with O2 and Nokia have been running a voucher redemption trial with The Telegraph in East Kent with around 150 retailers over the last six months.
This trail uses 2 dimensional barcodes displayed on paper or a phone screen and read by mobile phone cameras.No operator action is required except to point the camera at the bar code. The code is sent to a data base for validation using the text network.A response is received in under 3 seconds
This system has validated some 300,000 vouchers in the last six months with no recognition failures.
The other benefit of using Two Dimensional barcodes is that there are some 16 billion billion unique combinations. This allows unique vouchers for each consumer for each product creating a fully traceable redemption route, that is totally under the issuers control
Because a central database is used the vouchers can be fully managed and switched on and off at will preventing over or out of time redemption.
John Atkins, Canterbury, UK
I give the scheme no more than three years before it's wound up. It's very similar to the failed Somerfield scheme. It also attempted to collect data alongwith promotion redemption. The key problem is that these schemes can end up only collecting information on bargain hungry consumers. These are not the likely to be key to future profit growth.
Such schemes miss the point of Tesco's success which is that all categories of consumer are involved in Clubcard. This gives Tesco much more useful data and the advantage in the market is clearly being used to its full potential.
Phil Garton, Leicester,
what about the co-op divi as the earliest example of retailers offering loyalty schemes?
(in fact it's also the model that Tesco used to base their scheme on...)
adrian ashton, todmorden,
Where is the excellent graphic with this article for teaching purposes?
Paul Andersson, Northwood, UK