Loyalty cards planned for India

02 November 2010

NEW DELHI: Groupe Aeroplan, the Canadian loyalty card specialist, is attempting to launch a new programme in India.

The firm is planning to introduce a 'coalition card,' which allows participants to collect loyalty points from purchases at a consortium of retail and non-retail service providers, from 2012.

Groupe Aeroplan has already found success with its Nectar card in Britain, where more than two-thirds of grocery shopping is done via just four separate stores.

But the highly-fragmented Indian retail sector is dominated by a plethora of open-air bazaars and small family-run shops.

Deloitte estimates that the top five retailers in the country control only 2% of India's grocery business.

Rupert Duchesne, president and ceo of Groupe Aeroplan, said that the success of any loyalty programme would depend on a national presence, which India already has in sectors such as telecommunications, airlines, financial services and petrol.

"All these look like elsewhere in the world," he said.

"Retail is getting there quickly. We are starting to see chains: Tata Group and Future Group have substantial retailing presence."

But retailers in India have only a fraction of the clout they have elsewhere in the world.

Sales at even the leading retail chains are "minuscule" when compared with those of international rivals, Deloitte said.

Fearful of upsetting millions of independent shop owners, New Delhi has already barred direct investment by foreigners in much of the Indian retail sector.

Even in "single-brand" stores, foreign investment is subject to strict limits.

This has deterred big players such as Ikea from establishing a greater presence in India.

Data sourced from Financial Times; additional content by Warc staff