Tesco plans to launch the next generation of its Tesco Clubcard, making greater use of shopper behavior data and perhaps testing a contactless radio frequency identification system with cell phones that would eliminate the need for plastic membership cards. Aside from that, there was little of substance about Tesco's plans for its loyalty program in news reports.
Customers who use Tesco's Clubcard earn five points toward rewards for every £5 spent in one of the company's store or on its website. Points are also given for expenditures made with other merchants.
The U.K.'s largest retailer is looking to upgrade the Clubcard program at a time when competitors, including Aldi, Asda and others, are picking up market share.
Sir Terry Leahy, Tesco's chief executive, told The Herald, "In a recession, particularly a recession where food prices spiked up for a short period of time, people have been shopping around...If you can convince the consumers, particularly as they come out of recession, that they can trust that the prices are right and you can be rewarded for shopping with a retailer, it benefits you."
Carolyn Bradley, U.K. marketing director at Tesco, told The Times of London, "We think that in this market, loyalty is critical."
Discussion Questions: What are the keys to a successful loyalty program? Do the basic tenets change during a recession? Which retailer(s) have the best program(s) from your vantage point?