£120 per week or more in order to tempt them to the store. It was hoped
that this would act as a boost to the rather flat sales growth of 3 per cent,
which was just in line with inflation. McCarten predicted that observers
‘will see a much greater degree of targeting within our customer base and
a lot more experimentation in order to target our specific customers’. He
denied, however, that Sainsbury was to follow Tesco’s route, taken in the
previous Christmas period, when it switched a large proportion of its
annual £30 million advertising spend into direct marketing. However,
these announcements did little to soften the blow of less than encouraging
interim results released that same week, showing half-year profits of £393
million, below the previous year’s figure of £456 million and falling far
short of City expectations.
Safeway was quick to follow in Sainsbury’s wake, announcing that it
would be joining forces with Abbey National to offer a range of financial
services to its customers. The first product of the new partnership was to
be a new ABC bonus card, a similar scheme to Tesco’s debit account
scheme, launched on 17 June 1996. However, it took the debit account
scheme even further by allowing card holders to use the card to pay for
goods at any of the 70 000 other retail outlets that accepted the Visa
Electron scheme, whose participants included W.H. Smith, C&A and Our
Price. The card would also allow cash withdrawal from more than 1500
Abbey Link machines and give customers a free 24-hour telephone
banking service although, unlike Tesco, there would be no overdraft
facility.
Colin Smith, CEO of Safeway, described the card as a logical extension
of Safeway’s customer proposition ‘aimed at making shopping easier’. He
hinted that in the future they would hope to offer a full range of financial
services, through a planned Abbey National presence in Safeway stores.
Meanwhile, Ambrose McGinn, Abbey’s Marketing Director, recognized
mutual benefits, ‘There’s a large degree of customer overlap; we can use
behavioural data from each database to make timely and relevant offers to
our customers.’ Safeway shares subsequently climbed to a new high for the
year.
Other food retailers appeared to maintain a respectful distance from
these developments. As yet Asda had only tested different types of loyalty
schemes, one being a ‘Style card’ which gave vouchers for its range of
clothing and leisure goods. It had also linked up as a redemption member
of the British Gas Goldfish credit card, in which holders of the card could
earn discounts for gas bills and also spend Goldfish points in Asda and
other redemption member outlets. Asda’s Chairman, and his new CEO
Alan Leighton, preferred to stress that ‘simplicity is divinity’, in contrast to
their competitors’ foray into financial services. However, rumours of dis-
cussions between Asda, Kwik Save and Somerfield with various banking
and insurance companies were common. A survey by ICL Financial
92 Relationship Marketing