Does loyalty to one merchant really pay off?

Slovenian consumer advocates warn that loyalty card discounts often result in higher total spending due to psychological traps designed by retailers. According to reports from public broadcaster RTV Slovenija, shoppers may pay significantly more for promised percentage savings because they purchase unnecessary items solely to meet discount thresholds or accumulate points. While some consumers claim annual savings of several hundred euros, experts argue that targeted profiling through these programs can lead individuals to spend up to three times their usual amount. The average Slovenian household allocates approximately one-fifth of its monthly budget to food purchases. This substantial expense drives many consumers to join various loyalty schemes, which offer perks such as twenty-five percent discounts on specific goods, special days for pensioners, cheaper prices during point collection, and deferred payment options. During a recent segment of the television program Koda, researchers examined whether this loyalty actually pays off. One shopper interviewed at the People’s University in Kranj stated he saves roughly 250 euros annually through these cards. Another participant, who displayed an application containing about twenty different loyalty cards, admitted that he sometimes buys more than intended specifically because of the available programs. Goga Sredojevic from the Association of Consumers of Slovenia explained the mechanism behind this overspending. She noted that genuine savings occur only when buying necessary items at preferred stores. However, problems arise when purchases are made solely because a card or discount exists. She illustrated this with a practical example: if a retailer offers five euros off a thirty-euro purchase, and a customer has twenty-two euros worth of items in their cart, they might add eight euros worth of extra products. The final cost becomes twenty-five euros, meaning the customer paid three euros more than originally planned just to secure the discount. Information Commissioner Jelena Virant Burnik confirmed that studies support the finding that loyalty cards can triple expenditure. She attributed this to the ease with which companies profile customers and offer desired items at optimal moments. Virant Burnik compared this data sharing to announcing personal health issues, such as warts or infections, aloud in every store. She emphasized that modern applications collect phone numbers, email addresses, and movement data alongside basic identity information. If this data falls into the wrong hands, it poses significant security risks. A notable case highlighted by RTV involves the American retail chain Target. In 2012, the New York Times reported that Target used purchasing patterns to identify pregnant customers. By analyzing purchases of unscented cosmetics and specific supplements, the company began sending coupons for baby clothing to a teenage girl. Her father initially complained to the store about receiving these ads before learning his daughter was indeed pregnant. The retailer had deduced her condition based on shopping habits before the family disclosed it. Virant Burnik advises consumers to share personal data only with retailers where they make large, frequent purchases. As loyalty systems migrate to mobile apps, additional security vulnerabilities emerge. She stressed the importance of self-restraint regarding how much information is surrendered. Consumers retain the right to request the deletion of their personal data from any retailer at any time. The broadcast concluded by emphasizing the need for a holistic approach to customer relationships in the digital age.