If you shop at Coles and have a FlyBuys card, expect to receive plenty of offers in your mailbox in the near future.

Coles – owned by Wesfarmers Limited (ASX: WES) has announced that it won’t be extending its ‘my5’ offer beyond the end of October. The promotion offered customers discounts of 10% off five grocery items when they spend more than $50.

As I wrote in April this year, the main aim of the promotion was to capture consumer data. A Coles spokesman has told the Australian Financial Review that the relaunch of its FlyBuys program and the my5 offer helped it increase the number of FlyBuys members from 5 million to 7 million, giving Coles vital insight into consumer shopping habits and trends. It also allowed Coles to capture email addresses, which it intends to use to send out targeted advertising. Now that it has enough information, there’s no need to continue with the promotion any longer.

Competitor Woolworths Limited (ASX: WOW) responded through its ‘Extra Simple Extra Special’ promotion, which offered customers discounts of between 20 to 40% when customers swiped their Everyday Rewards card. It too will be capturing loads of information on our spending habits, and will also allow Woolworths to do targeted advertising.

Other retailers have implemented similar schemes, which give customers access to specials and discounted prices, not available to the general public – unless they become members that is! Super Retail Group (ASX: SUL) has a members loyalty card for most of its brands, including more than 750,000 members of its BCF Club. Australian Pharmaceutical Industries (ASX: API) has its Priceline Club Card, which is one of the biggest loyalty card schemes in Australia.

On one hand, this data allows retailers to send targeted offers to people who are interested – making it more cost effective for them, and more appropriate for the customer. Less junk mail to wade through is a win for both parties. On the other hand, of course, some people may be uncomfortable with being targeted in such a specific way.

Foolish takeaway

One thing is for sure – retailers are going to keep doing it because it helps them do business better. Good news for shareholders – good or bad news for shoppers, depending on your world view.

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Motley Fool writer/analyst Mike King owns shares in Woolworths. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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