Retail Rewards Programs Consumer Insights Key Insights 1. Grocery Stores and Specialty Retail Highest in Retail Program Membership 62% of consumers belong to a grocery store rewards program and 51% belong to a specialty retail 2. Discounts at Point-of-Sale Most Preferred Reward Consumers identified receiving a discount at the point-of-sale as their most preferred retail reward, however, less than half (46%) indicated they currently receive this reward from their retail rewards 3. Consumers Prefer to Shop Where They are Members, But Not Willing to Pay More While 71% of consumers agree that they prefer to buy from places where they are a member, only 23% are at least somewhat willing to pay more. 4. Selection of Gas Stations Greatly Influenced by Program Membership While Influence on Selection of Fast Food Retailer is Low 37% of consumers who are members of gas rewards programs indicated their choice of gas station is very influenced by their membership, compared to 4% of fast food members who select a fast food restaurant based on their membership. 5. No Fee Top Rewards Program Feature No Fee to Join was rated by 13% of consumers as the most important feature in a retail rewards About this study First Data Competitive Intelligence conducted the Consumer Loyalty Study with over 1,000 U.S. consumers in July 2008. The study focuses on rewards programs with Financial Institutions (FIs), the travel sector and the retail sector. This CI Market Brief focuses on consumer insights regarding rewards for the Retail sector. Sample size completing the survey for the retail sector totaled 500. Prepared by: Sharon Brant Director Media Contact : Mediarelations@FirstData.com (303-967-6323) Investor and Analyst Relations Contact: Silvio.Tavares@FirstData.com (303-967-8276)
Key Insight #1: Grocery Stores and Specialty Retail Highest in Retail Program Membership 62% of consumers belong to grocery store rewards programs with an average number of 2.2 memberships per participant. Grocery store members are very active with 91% of the memberships being used at least once since joining. 51% of consumers belong to specialty retail rewards programs with the largest specialty category membership being book stores. 62% of specialty retail members belong to book store rewards programs. While only 16% of consumers belong to a coffee shop rewards program, they are very loyal members making 84% of their purchases at stores they are members of. Retail Rewards Program Membership Industry Type % of People Who Belong to Rewards Program % Active Memberships* (Amount Total Memberships) Average Number of Memberships (per Participant) Percent Visits to Store Using Rewards Memberships Grocery 62% 91% 2 75% Specialty Retail 51% 8 2.1 75% Pharmacy 36% 91% 1.2 88% Department Store 21% 91% 1.6 83% Gas/Fuel 18% 93% 1.3 75% Fast Casual 18% 88% 1.6 48% Coffee 16% 95% 1.3 84% Discount Store 93% 1.3 72% Fast Food 6% 90% 1.4 48% * For the purpose of this study, active is defined as follows: having used the rewards at least once since signing up for it. Date: July, 2008 N = 1,000 Page 2
Key Insight #2: Discounts at Point-of-Sale Most Preferred Reward In general, the retail rewards that members receive do not always match with their preferences. While Discounts at the point-of-sale is the most preferred rewards, less than half (46%) of members indicated that they receive that reward. The second most preferred, Coupons for Discounts on Total Purchase, however, is received by nearly two-thirds (63%) of members. While 62% of members indicated they received Coupons for Discounts of Specific Items, that reward is rated seventh in terms of preference. Preferred Rewards (in Order from Most to Least Preferred) Percent Receiving Rewards 1.) Discounts at the Point of Sale 46% 2.) Coupons for Discounts on Your Total Purchase 63% 3.) Free Merchandise or Upgrades 3 4.) Discounted Prices 4 5.) Cash Back 14% 6.) Discounts or Rebates on Gas 22% 7.) Coupons for Discounts on Specific Items 62% 8.) Points or Miles Redeemable for Merchandise or Upgrades 21% 9.) Money Added to a Prepaid / Gift Card 5% 10.) Special Members-Only Benefits 38% 11.) Prepaid / Gift Cards Date: July, 2008 N = 500 Page 3
Key Insight #3: Consumers Prefer to Shop Where They are Members, But Not Willing to Pay More While 71% of retail rewards program members prefer to buy from places where they are a rewards member, only 23% indicated they are willing to pay more to shop there. More than half (56%) are willing to go out of their way to shop at a place where they belong to a rewards Impact of Program on Purchasing Decisions 100% 80% 60% 40% 20% 0% 23% 5% 18% 14% 62% I am willing to pay more to purchase items from a place where I am a member of their rewards program 15% 41% 14% 31% I am willing to go out of my way to shop at a place where I belong to a rewards 7% 2 14% 50% I choose retailers, companies or brands based on their rewards program 30% 41% 13% 17% I prefer to buy from places where I am a member of their rewards program 71% Disagree (0-4) Neutral (5) Somewhat Agree (6-8) Agree (9-10) Date: July, 2008 N = 500 Page 4
Key Insight #4: Selection of Gas Stations Greatly Influenced by Program Membership While Influence on Selection of Fast Food Restaurant is Low More than one-third (37%) of consumers who are members of gas station rewards program indicated that membership was Very influential in their choice of a gas station. That compares to only 4% of members of Fast Food rewards program who said that membership influenced their selection of a Fast Food restaurant. 41% of Fast Casual rewards members indicated that membership had No Influence on their selection of where to dine. Influence of Loyalty Membership on Choice of Retailer 100% 90% 80% 70% 60% 50% 40% 30% 15% 3 53% 37% 36% 15% 28% 16% 4% 44% 22% 20% 23% 23% 24% 36% 37% 38% 34% 17% 14% 20% 10% 0% 34% 26% 18% 41% 30% 27% 28% 31% 28% No Influence Neutral Somewhat Influential Very Influential Date: July, 2008 N = See page 7 Page 5
Key Insight #5: No Fee Top Rewards Program Features Consumers don t expect to pay a fee to join a retailer s rewards Consumers are also interested in programs that offer Ease of using Points/Rewards ; Ability to Select Benefits of their Choosing ; and Ease of Earning Points/Miles. Importance of Retail Rewards Program Features Having an appealingloooking program card 1% Having alternative methods for identifying your membership 6% Receiving communication of special offers or promotions 6% None of these 1% No fee to join the program 13% Ease of using points/rewards Being able to select/redeem benefits of your own choosing Ease of joining the program 8% Being able to track the amount of points/ rewards Not receiving unwanted communication Automatic redemption process 11% Ease of earning points/miles Date: July, 2008 N = See page 7 Page 6
Sample Size by Retail Program Type All 500 respondents were asked core questions relating to their retail rewards program membership and needs. In addition, respondents were randomly divided into subgroups to answer questions related to specific retail program types. The following table summarizes the sample size by retail program type: Sample Sizes by Program Type Grocery Specialty Retail Gas/Fuel Fast Casual Fast Food Discount Store Pharmacy Departme nt Store Coffee N = 149 N = 146 N = 70 N = 105 N = 46 N = 70 N = 73 N = 71 N = 92 Page 7