Sobeys leaving Air Miles

Grocer shops around for its own rewards program

Sobeys has decided to dump Air Miles and start its own loyalty program.

Empire, Sobeys’ parent company, is opting to join the Bank of Nova Scotia and Cineplex as co-owner of the Scene+ program.

This is no coincidence. As we brace for higher food prices and cope with a postCOVID workforce still trying to figure things out, loyalty will probably be the next major battle ground for Canadian grocers.

The Scene+ program at Sobeys will start in Atlantic Canada in a few months, and the cross-country roll out will end by early 2023.

That’s fast. Most Sobeysowned stores, including its online service Voilà, will have the program. Given how the market is changing, this move was critical and perhaps long overdue.

Since March 2020, 26 per cent of Canadians have switched the primary location where they purchase food on a regular basis, according to a recent poll by Angus Reid. Many have moved or opted to change their grocery shopping location for one reason or another. Having more people working from home has also triggered behavioural

changes.

With food inflation at

10 per cent, consumers are trading down or changing food shopping habits almost weekly. With higher food prices, everything is negotiable.

Where people buy food and what they buy is constantly changing, and keeping customers engaged with brands and stores is going to be challenging over the next several years. Coupled with the fact that younger consumers are rarely keen on being dedicated to any brands or stores, consumers need to be hardwired to become loyal more than ever.

Sobeys’ quick rollout will serve the company well, as it needed a better loyalty program.

PC Optimum is by far the most popular program where food is involved. More than 63 per cent of Canadians use it, followed by Air Miles at only 18.3 per cent, according to a recent survey by Caddle. The current Scene program is sixth, at a measly 1.9 per cent.

The gap between PC Optimum and the rest of the field is enormous. What’s more important, while 58 per cent of Canadians use loyalty programs at the grocery store every week, 73 per cent of us are influenced by what kinds of benefits these programs offer.

With few promotions going on at the grocery store and higher prices, shoppers will seek any help they can get.

Air Miles is a versatile loyalty program used by many retailers, but for Sobeys it became just an invisible advantage few really cared about.

Sobeys never really had control over it. The program became confusing for members and retailers, including

Sobeys. And Metro, one of Sobeys’ main competitors in Eastern Canada, also had a deal with Air Miles.

The market is just not the same as it was in 2020 when the pandemic started. Consumers are economically challenged in many ways and a strong loyalty program can allow Sobeys to empathize with a struggling public.

With higher prices and an acute focus on private labels, Loblaws, with its PC Optimum program, clearly has an advantage Sobeys wanted to address. While Sobeys is getting its “private label” act together, it also needs a program to push its own brands like Compliments and Panache. Loblaws’ private labelling strategy, with President’s Choice and No Name, has left the competition in the dust.

Only time will tell as to what the program will look like and how it will get consumers

to buy more often at Sobeys. But seeing Empire, a Nova Scotia company, partner with the Bank of Nova Scotia was anything but a surprise.

Scene has the potential to do well. It has 10 million members, but the awareness of the brand is lacklustre and few use points. Sobeys’ network could change that. It also needs a unique name to make it Sobeys’ own.

Regardless, for Sobeys, working with Air Miles was like rowing against the current. Sobeys was likely just waiting for its contractual obligations to end so it could move on to bolster a program it can better control.