Grocery Loyalty Drivers vs. Payments

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By: Wise Marketer Staff |

Posted on August 27, 2018

What drives grocery store loyalty? According to a recent survey by Minerva Insights & Solutions, convenient location is not just a driver, but a necessity. But though a necessity, location doesn’t give a consumer an additional reason to choose one store over another – when multiple choices are available. With Amazon offering some grocery options – even in areas where recently purchased Whole Foods locations aren’t a viable option – consumers have multiple choices, even in so-called food deserts.

Beyond location consumers look at items like price, fresh produce and assortment and quick check-out.

One of the quickest check-out methods is  using payment cards at the point of sale yet some stores are considering eliminating some of these payment options. Meaning that some consumers who rely on grocery purchases to add to their points totals for airline, hospitality or other affinity cards will no longer have that option, and will have to choose a grocer’s other amenities over full card payment options.

Kroger is one of the more popular grocers and, according to the Minerva Insights & Solutions report: Twenty-six percent of those surveyed said they had shopped at the grocer over the past month, putting it third on the list. Walmart topped the survey with half of shoppers visiting there in the previous 30 days. Kroger ranked eighth in terms of customer satisfaction at 71 percent. Trader Joe’s (93 percent) topped the list, followed by Costco (90 percent).

According to Bloomberg News, Kroger, which already stopped accepting Visa credit cards at its Mariano’s subsidiary in California, is considering expanding the ban across the company’s other stores. There are a pair of drivers behind the decision. The grocer’s own loyalty program features a card co-branded with MasterCard. And, the grocer is objecting to Visa’s interchange fees.

Merchants have long complained that interchange fees, the cost of accepting cards, are too high. Most quick service restaurants didn’t accept credit cards until the interchange formula was changed several years ago.

But the decision to eliminate a payment choice could hurt Kroger more than any money it saves on interchange. As a recent MarketWatch article points out, consumers are very loyal to their payment cards, and don’t like to switch from one to another. However, there are consumers who will use certain cards for some purchases and other cards for other purchases, particularly when the rewards are different for different types of purchases. Discover and some other card issuers offer rewards programs that shift from quarter to quarter.

Citing a CreditCards.com survey, MarketWatch said just over a quarter (28 percent of consumers had never changed their “primary” credit card, with more than one in 10 (12 percent) having chosen their primary card a decade or more ago.

Phil Britt is a reporter for The Wise Marketer.