Cosima Marriner July 24, 2011
Sarah Farah, a traditional and healthy shopper ... "I have two children and I like to buy healthy foods". Photo: James Brickwood
EACH time you swipe that ubiquitous loyalty card at the checkout, exactly what you bought, when and where, is being recorded.
The major supermarkets, Woolworths and Coles, are using information about shoppers' habits to build detailed customer profiles attached to their loyalty programs.
They know if you regularly buy ham and tomatoes at lunchtime, or if you stick to one shampoo brand but will happily buy whichever toilet paper is on special. Whether you like a bottle of sauvignon blanc on Friday nights and use your petrol discount on ''cheap Tuesday''. Not to mention your age, sex, address and employment status.
Grace Ramos, a traditional and convenience shopper ... "I love cooking from scratch, but with three children and one on the way there are times where I go for convenience". Photo: James Brickwood
By comparing the information with other customers, supermarkets can pre-empt shoppers' decisions.
''Loyalty programs help you pick up patterns in shoppers' behaviour because you can look into their basket,'' Coles's chief financial officer, Tony Buffin, said. ''So we know men who come in to buy newborn nappies also pick up a few beers … if we change a product assortment we can predict what people will want to buy.''
It is a powerful tool in the low-margin grocery business, particularly as new competitors such as Costco and Aldi expand.
''Supermarkets have access to a huge amount of information. Most people don't know what that data is being collected for, the detail of that data, or how it is being analysed,'' Deakin University consumer behaviour lecturer Paul Harrison said.
''We're highly manipulated when we do the grocery shopping. People like to think they're in control. They're not.''
Soon supermarkets will be able to track shoppers via GPS as they walk through the store and send their mobile phones details of specials in that aisle.
''It's about, 'what's in it for me?','' head of digital for TNS Global in Australia, Jonathan Sinton, said. ''People don't mind marketing offers; it's when [they are] irrelevant they don't like it.''
Supermarkets dole out petrol discounts, frequent flyer points and special offers to persuade customers to spend more money with them more often. A Clubcard customer of British supermarket chain Tesco visits four times as often and spends three times as much as casual shoppers.
Emily Amos, the head of Woolworths' Everyday Rewards program, said the programs were extremely valuable for the company.
''When people come up the escalator they turn right or left, to Woolworths or Coles. It's about making sure when they come to us they're happy with the range they get.''
Six million Woolworths customers and an estimated 7.5 million Coles customers are prepared to sacrifice some of their personal information for points. Ingrid Just, a spokeswoman for Choice, said the ''promise of free stuff'' is enough to lure shoppers back to the same stores ''without looking around for a better deal''.
As most people visit the supermarket a couple of times a week, loyalty card information can detect changes in consumer behaviour, which dictates ordering of stock and decisions about store layout.
If Pantene shampoo is out of stock, Mr Buffin said Coles can predict how many customers will choose Elvive or Dove instead, and how many will go to Woolworths to buy Pantene.
''It tells you about the customers actually in your stores and enables you to map your customers across their lifecycle,'' Ms Amos said.
Loyalty schemes are also using technology to manipulate the buying decisions of targeted groups, such as families with young children or affluent singles.
Shopping trolleys fitted with computer screens and GPS trackers are now being trialled in some IGA stores.
Customers swipe their loyalty card to bring up their shopping list on screen, then the computer tells them where each item is located. The screen flashes up specials available and they can scan purchases to track their spending.
Smartphones also hand the customer more purchasing power: they can research products on the internet on the spot and check if they are cheaper nearby. ''People are starting to use their phone as an in-store shop assistant,'' Mr Sinton said.
''Every store has to make sure they've got the cheapest products.''
Privacy experts are concerned that information collected from the loyalty card could be used against the shopper if passed to third parties, such as insurance companies, or by law enforcement authorities trying to track down someone.
But Woolworths and Coles are adamant they handle all their customer information with care. ''If we didn't, our customers would never come to us,'' Mr Buffin said.
''We make sure we use that information very carefully.''
FINER FOODS, LUNCHBOX OR CALORIE LOADER?
IF YOU are willing to experiment with new products and are time-conscious, you are a ''Finer Foods'' shopper. And if you regard food as fuel and your microwave gets a good workout, then you are a ''Convenience'' shopper. These are two of the six main categories the British supermarket chain Tesco uses to group shoppers based on the products they have in their trolley. Products are divided into 25 categories including Adventurous, Convenience, Lunchbox, Home-Brand and Calorie Loaders. The Sun-Herald asked shoppers at supermarkets in Sydney to nominate their shopper profile and main product categories based on their purchases.
PRICE WAR'S LATEST FRONT
ICE-CREAM has become the latest battleground in the price war between the two major supermarkets, Coles and Woolworths. Coles announced it would drop the price of its home-brand ice-cream from $4.19 to $2.19 for two litre tubs. Woolworths said Coles's move was in response to it cutting ice-cream prices. On Friday, the Competition and Consumer Commission ruled Coles's milk price-cutting was not predatory.