Can frequent-flier-style points make people buy more groceries?
Stop and Shop Supermarket Co. believes so, and has linked travel rewards to a new cobranded credit card.
The grocery chain and its issuer, Bank of New York, last week launched the SuperRewards MasterCard, which earns two points for every dollar spent at Stop and Shop locations. One point is awarded for general purchases.
Cardholders can redeem those points for discounted or free tickets on Northwest Airlines, plus discounts on travel packages from Delta Dream Vacations or GWV International Vacations.
Stop and Shop operates 130 supermarkets in Connecticut, Massachusetts, Rhode Island, and New York.
The no-fee card comes with a prime plus 1.4% teaser, which rises to prime plus 8.9% after six months, in line with other cobranded supermarket cards. But most of Stop and Shop's competitors offer their cardholders discounts on groceries.
"There is no logical correlation between what Stop and Shop sells and travel," said Anita Boomstein, a law partner at Hughes Hubbard & Reed in New York who represented Toys R Us Inc. during negotiations for its card, also issued by the Bank of New York.
"We found through research that people get more excited about travel bonuses than free food," a Stop and Shop spokeswoman said. "We decided to make rewards for travel to give people more incentive" to use the card.
"You'd have to put a lot of spending on the card to get any meaningful type of ticket," said Ms. Boomstein. "I don't think people will see enough value to make them want to use this card."
Cardholders need 30,000 points to earn a free ticket on Northwest to anywhere in the United States, Canada, Mexico, or the Caribbean. For 5,000 points consumers can purchase a $99 companion ticket. Other rewards include discounts on vacation packages for a varying number of points.
Ms. Boomstein pointed out that supermarkets attract a cross section of economic groups. "They may not all find this type of benefit appealing."
Michael Auriemma, president of Auriemma Consulting Group, Westbury, N.Y., said "A good-value proposition ought to be simple to understand and simple to communicate - and this is neither."
