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Let your customers choose for their promotions?alton-waitrose-64

The supermarket chain, Waitrose, allows its customers to choose for themselves which products they can get discounts on. Good idea?

Launched this past June 17, the Waitrose initiative sets off a new battle in the merciless war between British retailers trying to attract customers into their stores. The idea is quite simple: customers with a loyalty card can choose 10 items from a list of 250 products on which they will benefit from a 20% discount. Estimated cost of this operation: up to 260 million pounds. The company reached an agreement with its suppliers to equitably split up the cost.

Some good

This idea has many positive points:

  • it is an excellent public relations operation: the British press have widely reported on the initiative.
  • it allows the company to create customer loyalty. In the retail sector, the most important thing is to get customers into the store.  The customer will then be more likely to buy the majority of his or her groceries there. A promotion targeted at some products could thus translate into an increase in purchases per customer. 
  • it gives Waitrose the opportunity to better understand its customers and their shopping behaviour. Regardless of the outcome of this experience, in the end, Waitrose will have precise data on its customers' preferences, and will be able to better choose which products to focus its promotional efforts on.

and some not so good

Naturally, all things have their downside:

  • the final cost of this operation is still unknown, but could be quite significant. Even if Waitrose shares the cost with its suppliers.
  • the risk of confusion: 950 products, that's simply enormous. Especially since according to Waitrose's early estimates, the average customer only tests about 200 different products per year, and the average cart has just 20 items. Thus, the customer could get confused by all the promotions and not know what to chose from.

Fortune favours the bold

Good idea or bad? Only time will tell. One thing is certain: the approach is original and audacious, and deserves to garner attention. If Waitrose lives up to its ambitions, it could learn a lot about the behaviour of its most loyal customers. 

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