Shopper Credit Cards and Member-Owner Benefits

I just read an article in Supermarket News indicating that within a year or so it will be common for shoppers at Publix or Kroger or Winn Dixie to present "cobranded" credit cards when paying for their purchases.

The idea -- and it's definitely a good one -- is that by using a Kroger/VISA or Publix/MasterCharge card to buy items, you will get a rebate at the end ofthe year on your credit card bill. Paying for grocery purchases by credit card has increased in usage and volume by 90% since 1991. Certainly, it is not uncommon for a family to spend $100 per week ($5,200 per year). All of that buying done on a charge card providing a 2% rebate yields $104 per year. That's a strong incentive to remain loyal to a specific supermarket.

It's a great scheme -- but hardly a novel one!

What Supermarket News missed in its research is that little, independent co-ops have been in partnership with their shoppers for years and years. Your profit sharing when buying at the co-op is done in advance in the form of a point-of-sale discount, and is extremely liberal considering the tight margins in the world of retail food. Moreover, it has nothing to do with payment method -- cash, check, credit card. We take ‘em all.

I found it interesting that executives for the supermarket chains were practically salivating at the prospect of the information they would gain from shoppers using "their" credit card. VISA already has released a software package for its co-branding partners that allows the retailers to track all purchases made on its card. The best part for the store is that the discounts won't cost them a thing. The 1 to 2 percent amount they eventually provide to their card holders is to be paid by the credit card company. All generic cards charge retailers an interchange fee, which would be eliminated by "co-branded" cards.

I guess I've got to hand it to those guys. They keep coming up with angles on consumer spending patterns which make their profits larger, while simultaneously creating an impression with the shopper that it's all for them.

Most co-ops are unsophisticated by comparison. We struggle and strain to find ways to maintain the lowest shelf prices for everyone. Just to make it all the harder -- and more unlikely -- to operate at a profit, we then discount our products to our members. To top it off, we actually request the lowest amount we can for equity investment because we believe in equality of ownership.

The next time you are offered a frequent shopper card or a co-branded supermarket card, I hope you will think of how co-ops have for years been providing those same consumer benefits. We don't get noticed as much because we've never had the capital, the profit, or the high-end connections to open multi-location, huge storefronts.

But we're the real thing.

From the editor:

A version of Alan Mathewson's remarks originally appeared as his manager's report in Co-Options, the newsletter of Sevananda Co-op in Atlanta. Although Cooperative Grocer seldom reprints from other publications, I'm happy to occasionally give someone else my editor's column.

Beyond the specifics, Alan's article illustrates two additional points: First, co-op managers -- not just the newsletter editor or education staff -- have the opportunity and the responsibility to continually educate the members and public about cooperatives. Judging by the co-op newsletters I read, there are many co-op managers and staff doing a great job at addressing this responsibility, as well as many who are not.

Secondly, managers and staff also need to keep an eye on the larger market and industry of which they are apart and to educate members and public about the co-op's position in those contexts. In the best of circumstances, such efforts will strengthen both the members' understanding of the cooperative and their support for its professional management and competent governance.

-Dave Gutknecht