Magna hangs tough in loyalty card market
Richard Browne, Business Reporter
Ten years after Magna Rewards introduced loyalty cards to the Jamaican market, the industry has started to change - though not enough to have any real effect on the regional company.
With 500,000 active customers and more than 70 partners at more than 250 locations, Magna, which is jointly owned by Prism Services Inc of Barbados and Neal & Massy Holdings of Trinidad comes close to monopolising the market.
Its regional markets also include Antigua, Grenada and St Vincent.
In Jamaica, Magna also has co-branded cards with Scotiabank, JIIC and Guardian Life, deepening its penetration in the market.
Sure Loyalty, the new kid on the block, has been challenging Magna with its own purple card since July 2012. It has grown to 20,000 customers and 11 partners, but has got some way to go before posing any great threat to Magna.
"Sure Loyalty is our competitor, but it hasn't had any real effect on our business," said Katrina Bailey, marketing manager at Magna's Kingston office.
"We are in every industry," she said, noting that the poor economy helps drive demand for consumers who want to cut down on their expenses.
"Business is growing," said Bailey. "This is a First-World concept in a third- world economy, so it must grow."
Under Magna's reward system, the cardholder receives 1.5 per cent on each purchase over J$200 plus GCT, and another one per cent if using the Scotia/Magna credit card.
Magna later issues a 'cheque' every four months to cardholders, which can only be 'cashed' against future purchases at Magna participating businesses. For a J$1,000 purchase, a Magna cardholder would earn five points, or up to 10 points if they also used the credit card, according to Bailey.
Magna's most recent partners in Jamaica include Dixons, Excel Auto, MegaMart, and Bashco.
The rewards company is planning big promotions to coincide with its 10th anniversary in October.
Sure Loyalty is run by Dexter Tulloch, who knows something about the loyalty card market as the previous business director for Magna Rewards.
A number of companies have launched in-store cards, with their own reward systems, but in the market segment where Sure Loyalty plays: "Magna is the sole competitor. They have had a monopoly for 10 years and have got a little complacent," said Tulloch, who claims his technology is superior.
For example, it allows Sure cardholders to use their phone number to make purchases if they don't have their card at hand. In an effort to win more customers, the rewards offered are also higher by up to 25 per cent and cardholders earn seven times more points than Magna for similar spend.
"Jamaican consumers' exposure to First- World retail practices, coupled with the increasing economic challenges and its direct impact on everyday consumables have heightened the huge appreciation for value the programme offers," said Tulloch.
With Sure Loyalty, a cardholder receives two per cent on each purchase over J$200 plus GCT with cheques issued every four months. For a J$1,000 purchase, a Sure cardholder would earn 40 points, allowing customers to accumulate points at a faster rate than Magna.
Sure Loyalty's first major partner was Empire Supermarket, which has three stores in Kingston and Portmore. Empire had first tried to become a Magna partner, but was declined because at the time, a Hi-Lo supermarket, a long-time Magna partner,
was located opposite its Liguanea store.
They are happy with the end result, however, according to Denise Campbell of Empire, who says the Sure Loyalty card has been "working very well".
Sure Loyalty's free consumer network continues to build partnerships with essential "life-style industry retailers and will be unfolding in other urban districts nationwide, in coming months," said Tulloch.
in-store loyalty card
Despite its success with Empire, Sure lost out to Magna on the high-volume supermarket chain, MegaMart, whose four superstores in Kingston, Portmore, Montego Bay, and Mandeville started to accept the Magna card last year.
MegaMart has its own in-store loyalty card, and while customers could at first use both cards for a single purchase, MegaMart now requires customers to choose.
MegaMart loyalty cardholders get up to three per cent 'megacash' each time they shop, and also receive a J$1,000 MegaMart voucher when they shop between Mondays and Thursdays if they spend more than J$10,000.
Both cards are now equally popular customers with either a Magna or MegaMart card now outnumber non-cardholders by two to one, according to MegaMart.
Meantime, Loshusan, a popular supermarket in Barbican, has recently taken the decision to phase out the Magna card, in favour of its own in-store card, which is also accepted at John R. Wong supermarket in New Kingston. The two supermarkets are owned by the same family.
The Loshusan card earns 10 points for every J$1,000 of purchases.
In-store loyalty cards either allow shoppers to rack up points that can be offset against future purchases or gives immediate discounts to cardholders. Pharmacy company Fontana for example, gives discounts of up to 20 per cent to members, while cardholders can also rack up points on spend above J$500 per transaction at a rate of 50 points per J$1,000 of transactions.