This will come as unwelcome news to card issuers, especially those who partnered with SAA Voyager and in just 20 months have had to deal with two hikes in the price of Voyager miles. At the beginning of 2004, Voyager-linked cardholders were earning one mile for every R5 of card spend. Today some banks, such as Nedbank, require R12.50 of card spend to earn a single mile.
"The new Co-Operatives Act is about to come into effect, and the time is ripe for marketers to take note of consumer co-ops," said Bruce Conradie, Managing Director of Razor's Edge, at the launch of a new survey on the subject. "Within a few years marketers may find that many more of their target customers belong to a co-op than is the case today."
These are the findings of the Discount Clubs and Programmes (DCP) 2005 report, which provides a comprehensive view of formal discount clubs and programmes in SA and is co-published by Razor's Edge Business Intelligence and Imbhumbhe Solutions.
Besides direct competition from co-ops offering banking services, card issuers may find their customers using co-op buying cards to make purchases - co-ops offering cards already exist. "The new Act aims to foster a greater variety of co-ops than we have seen in the past, so we can expect to see banking co-ops and savings co-ops, for example."
The potential for the sector is astonishing. The country already has five consumer 'buying associations' that collectively account for over R3.8 billion in expenditure by members.
"The co-op offer is compelling because the existing co-ops offer a rebate on card spend of around 2% to 5%. In contrast, most credit card rewards programmes offer a return of 1% or less. In their favour, credit cards can be used at any merchant, whereas co-op cards can be used at participating merchants only. Even that advantage will lessen as marketers' awareness of co-ops grows and the base of participating stores grows," Conradie noted.
The buying power, and even the existence, of these associations (Cape Consumers, Koopkrag, Iemas, Pretorium Trust, and Samba) has passed by many marketers unnoticed. In the last financial year, the five associations paid out R150 million in rebates and distributed profits to their 200 000 members.
The current base of participating stores is estimated at over 4500 outlets, and a number of national chain store brands have signed up with each of the five buying associations, among them Ackermans, Dion, Game, Shoprite and Woolworths.
The new Co-Operatives Act has already been approved by the State President and is expected to be promulgated in the first quarter of next year. Seven types of co-op are identified: agriculture; marketing and supply; housing; financial services; consumer; burial societies and worker co-operatives.
Under the present Act (1981), the minimum number of individuals who can form a primary co-operative is eleven. The new Act allows five individuals to form a co-op, and also allows for support of co-operatives from all spheres of government and other institutions.
'Discount Clubs and Programmes 2005' profiles and analyses the identified South African discount clubs and programmes and contrasts them with rewards programmes and customers clubs.
