The independent forecourt retailer sector could be supporting supermarket businesses to the tune of £10 million a year by participating in loyalty card schemes, claims Ramsay MacDonald, retail director of Certas Energy.
In a New Year message to retailers nationwide, he is trying to encourage them to think hard and really look at the nuts and bolts of the business before taking the “devil you know” approach to signing up with a major brand.
“With cards like Nectar and Tesco Clubcard, retailers are paying without getting much in return,” he said. “If they were getting access to the CRM data – information about their own customers - it would be worth it, but they’re not. They’re paying for the points come what may, whether they’re given out to customers or not. They don’t get access to the CRM data, and their customers don’t redeem points in their business, they redeem them elsewhere.
MacDonald came to his conclusions as a result of learnings from the acquisition of independent dealer chain Calanike, which went into receivership in 2012. He said issuance rates on Nectar cards were extremely low, and prompted him to estimate the £10m figure based on a calculation that each full tanker load typically costs about £90 in terms of dealer contribution to the scheme.
“With Nectar, for example, retailers pay on every litre of fuel that’s delivered however many points they issue,” he said. “The issuance rates are critical. If you’re not getting to more than 30-40% issuance, then you’ve really got to question what the scheme is adding to your business. What could you do if you were using that money in a different way?”
“Our New Year message to all dealers is not to be frightened of change. The market has changed dramatically over recent years, almost beyond recognition and it is important for any dealer’s future to look at all their suppliers to establish the value of the brands they work with and whether they present the best opportunity for the future. Just renewing because it’s the devil you know is not a good option.”