South Africa’s second largest grocery retailer Pick n Pay has launched the country’s largest and most extensive loyalty programme, named Smart Shopper.

South Africa’s second largest grocery retailer Pick n Pay has launched the country’s largest and most extensive loyalty programme, named Smart Shopper.

The total capital investment was about ZAR140m (£12.3m). Pick n Pay chief executive Nick Badminton said: “We’ve been researching consumer appetite for loyalty cards in South Africa for a number of years. Loyalty programmes are not new to South Africa, but to date there has been no dominant grocery loyalty scheme that allows customers to benefit from rewards on almost every item in their basket.”

The programme is based on a reward point collection card, where points can be exchanged for credit on the card to spend in store or through coupons.

One point is awarded for each rand spent.

Smart Shopper has been initially launched in partnership with six of Pick n Pay’s key suppliers, Coca-Cola, Kimberly-Clark, Nestlé, Tiger Brands, Unilever and Vodacom. Pick n Pay marketing director Bronwen Rohland said the group aims to have three million of its customers on the loyalty programme by the end of the first year of roll-out.

Meanwhile, Walmart’s entry to South Africa, via its stake in Massmart, is looming over local retailers and the need to develop a coherent strategy has never been more apparent. The knee-jerk reaction by local retailers to a large multinational entering a market is usually price competition through promotional campaigns and price cuts. However, local retailers have rarely won a price battle with the world’s largest retailer.

For local retailers there is a need to differentiate and find new angles to compete. While Pick n Pay has said its loyalty scheme has long been in the pipeline, it is likely that Walmart’s entry sped up development. The fact that Pick n Pay is thought to have taken inspiration from Tesco’s Clubcard is an interesting point. Clubcard has underpinned Tesco’s success in the UK and its data mining tools are a key reason why it has been able to stay ahead of Walmart-owned Asda.

By launching a loyalty scheme now, Pick n Pay will enable itself to build a solid understanding of its customers prior to Walmart’s entry gaining traction. Partnering with large manufacturers will also allow it to build collaborative promotions that are customer targeted and competitive. Attracting loyalty members will be Pick n Pay’s short-term strategy, if it can succeed here its long-term future is in safe hands.

Greg Hodge, research director, Planet Retail. For more information contact us on:

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