MATCH UP: Plenti versus Shop Your Way.
American Express has recently launched a multi-retailer loyalty program called Plenti. It’s goal is to offer rewards to customers who shop across brands with retailers ATT Mobile, Macy’s, Rite Aid and Exxon/Mobil. Shop Your Way Rewards is a multi-retailer program that primarily serves stores affiliated with the Sears Holding Company: Sears, K-Mart, Land’s End and My Gofer. Let’s look at the two programs and make an assessment of what the future holds for each.
The two programs are quite simple. Earn points on purchases. Redeem points on future purchases. Receive incentives and promotions to show both online and in store. Consumers love loyalty programs for the combination of relationships and savings. Retailers have concerns when loyalty programs cut into already decreasing margins, but accept this is an aspect of sales in today’s marketplace.
Long gone are the days when American Express was the green premium credit card which business professionals kept for account management and entertaining status. The focus for the organization is skewing more towards middle class and working class families, in an appearance to have broader range appeal while fighting off challengers such as Capital One. While no one in any organization will publically admit it, it is believed that the AMEX/Wal-Mart banking/debit card project BlueBird cost the company it’s credit card exclusivity of the Costco account. Costco cards made up one in 10 American Express cards — and the number had been growing.
One of the potential negatives for Plenti that isn’t being discussed other outlets is that members of incumbent loyalty programs are being asked to surrender their current reward points with the other programs and put them into the Bowl of Plenti. So, if you have AMEX Membership Rewards or Rite Aid Living Well, you are expected to turn them over. This could produce various reactions, depending on the loyalty of the customer to their incumbent retailer. Look for many people to push back on what this does for their airline rewards, which are often seen as the gold standard of all customer loyalty programs.
Shop Your Way Rewards has been one of the most successful of many retail customer loyalty programs. While Sears Holdings keeps the specific numbers secret, it is estimated that one out of five U.S. households have signed up since the program’s inception. Keeping them active is the task. Sears Holdings has used this as a touchstone of the Members First campaign to increase brand and customer loyalty. The company has sought to bring other retailers into the fold, with the majority of SYWR partners available with online purchases. Brick and mortar locations such as selected Burger King and Popeye’s Chicken restaurants do participate as in store partners, but only offer points based on purchases and do not allow redemption of points.
Sears Holding stores have a loyal clientele while the company seeks to restructure and become relevant again. Recent SHC ad campaigns and promotions have shifted the focus to lead with the Shop Your Way brand, and highlight it’s retailers as members of what’s being marketed as a bigger brand.
PREDICTIONS: AMEX has deep pockets, so launching a new brand isn’t as big a stress point as it would be for other companies. Performing a roll up of independent rewards programs into one brand could be a bonus for many consumers. To ensure that the core credit card can be universally used at most retailers, American Express has to guard against getting too close to some retailers at the expense of others. If they land another category killer, such as a national grocery store chain or large quick service restaurant, having these in place will quickly accelerate the acceptance of the program. Rewards programs do attack already slim margins at retail. While cost-conscious consumers will like this and chain retailers have embraced it, the losers here are independent and artisanal retailers.
To compete toe to toe with Plenti, Sears Holding Company has a great need to expand the SYWR networks for both increased rewards with purchases and opportunities redemption. SHC needs to sign up several other major retailers such as a competing cell phone provider, gasoline retailer, supermarket or additional retail points of purchase to balance out the opportunities. Just having Lands’s End, My Gopher, Sears, and K-Mart won’t be enough points of acquisition and redemption in the long run.
For Sears Holding Company, Plenti could be the best thing that ever happened. If the leadership in Hoffman Estates, IL uses this challenge as a catalyst to expand and grow the program, it could become as valuable an asset for them as their vast real estate holdings and legacy brands, such as Craftsmen and Kenmore. Like a baseball player or a musician, Sears could sure use a hit. If they take an adversarial stance with retail partners that it’s either SYWR or Plenti, these efforts could rejuvenate the brand and the program … and even the company.
Look for consumers to have more options on how to shop and spend. That is always a good thing.
— The Editors