Bank of Montreal and Sobeys Inc. announced a partnership Sept. 9 to offer cobranded MasterCard credit cards to Sobeys’ customers in Canada with rewards-earning options, including airline miles for one of two cards.
In one of the initiatives and building on the Canadian store’s Club Sobeys rewards program, the companies are launching the No Fee BMO Club Sobeys MasterCard cobranded card in Ontario and Western Canada. Customers earn double points for every dollar spent when using the card with the Club Sobeys loyalty card at Sobeys stores and one point for every dollar spent elsewhere using the credit card.
Customers who sign up for the card get an automatic 1,375 Club Sobeys points, which is worth a C$10 (US$9.67 or 7.40 euros) gift certificate at Sobeys stores. Cardholders who use the card between Sept. 10 and Dec. 31 to pay for groceries at Sobeys stores also are eligible to win one of 25 prizes of C$1,000 off their credit card statement.
In the second initiative, taking place in the Atlantic region of Canada, BMO and Sobeys are offering customers of Sobeys and Foodland stores the No Fee BMO Sobeys Air Miles MasterCard. Cardholders earn three Air Miles rewards miles for every C$20 spent using the card at Sobeys and Foodland locations for the first six months. They receive one Air Miles reward mile for every C$20 spent on all other purchases made with the card.
New cardholders will receive 140 Air Miles rewards miles for making their first purchase with the card, which is worth a C$20 gift certificate for Sobeys and Foodland stores.
Both cards come with no annual fees.
Despite the perks, the cards’ rewards terms may not be enough to lure consumers in today’s market, but the retailer’s client base is large enough that the initiatives could succeed, contends Steven Kietz, managing partner of Woodbury (N.Y.) Advisors.
Creating word-of-mouth, viral marketing for the grocery-store program among the stores’ customers will be an important part of getting consumers to sign up for the cards, Kietz notes. “The Sobeys brand is strong and has a large customer base,” he says.
The chance for success from offering cardholders the ability to earn airline miles will come down to how the BMO card compare with other airline miles cards and payment mechanisms, Kietz suggests. “The value proposition may not be rich enough to move share from the cards customers are already using,” he says.
Indeed, BMO and Sobeys may have their work cut out for them. “Historically, these grocery cobranded cards have not really kicked in because the margins are a little low to create valuable rewards,” says Kietz, noting there has not been a successful grocery store card in the U.S.
BMO and Sobeys did not respond to requests for interviews.
What do you think about this? Send us your feedback.
