The FINANCIAL — With about 170 companies enrolled and 300,000 cards issued, the UNICARD has effectively captured the Georgian retail market. This growth notwithstanding, many businesses have chosen to quit this universal loyalty programme or significantly lower the number of bonus points available for accumulation with each purchase.
The Universal Card Corporation, which introduced the UNICARD, was founded in cooperation between Georgian investors and a British investment fund. Beso Abuladze, CEO of the Universal Card Corporation, said that “the main goal of the UNICARD project is to offer to the Georgian citizens a universal loyalty scheme, the first of its kind in Georgian history”.
To enrol in the programme the companies do not pay an entry fee, however they pay a commission fee directly proportional to the revenues generated by UNICARD purchases in the companies’ branches. “This means that if customers shop and accumulate bonus points with the UNICARD, the companies will pay some commission fee according to the revenues and accumulated bonus points,” Abuladze said.
The commission fee depends on the size and output of the companies involved.
The same instrument also determines the numbers of points customers can gather per purchase. Since different businesses in various sectors generate different profit margins, they also allocate different percentages of their profits for the loyalty scheme, thus determining not only the fee, but also the number of points customers can accumulate per each 10 GEL (as a rule) spent at the establishment.
Currently around 170 companies are enrolled in the programme. The number of locations where the customers can accumulate points has reached almost 1,000.
Several businesses that originally enrolled in the loyalty scheme, however, chose to drop out, including Kala Group, one of the most popular restaurant chains in Tbilisi, NTour – largest tour operator specialized on charters, Natali beauty salons and Prego pizzerias.
“Some of those merchants who signed up initially saw the huge coverage by UNICARD and approached us after two or three weeks with the concern that they did not expect so many customers to carry the card and that they are not ready for such a big inflow of customers,” Abuladze said.
Saving on costs proves another reason for companies to stop accepting the card. “They [some of the businesses] did not see at this point a reason to allocate extra cost categories for loyalty schemes,” Abuladze said.
Nani Shengelia, Director of the main office at NTour, told The FINANCIAL that the reason this travel agency stopped accenting the UNICARD was unrelated to cost considerations. “We first thought that we would be the only travel agency accepting the card according to the agreement, but it later turned out that other travel agencies also had the card, so we stopped accepting it,” she said.
Director of Kala Group, which owns several cafes and restaurants in Tbilisi, including Acid Bar, KGB, Nineteen, Near Opera and Kala, told The FINANCIAL that the Group’s marketing department no longer considered this loyalty scheme to be profitable for the company. Besides, the Group even had to fire one manager who abused his position to accumulate points on his personal card.
Several more companies, around 50 from the original 110, chose to lower the points available for accumulation at their stores. “When they [the merchants] realized that a lot of customers are involved in the programme, they also realized that their cost associated with the loyalty programme is too high, that’s why they lowered the bonus points offered to the customers,” Abuladze said.
In some cases, the number of points available for accumulation per each 10 GEL spent became less than 1. Perfume and make-up retailers (Lutecia, Voulez-Vous and Yves Rocher), all of which were part of the original package, all decreased the number of points. Many restaurants and cafes, listed in the original card package, are now either out of the scheme or offering as low as 1 point per 10 GEL spent. Even higher-end clothing retailers, such as Joop!, chose to lower points offered to the customers.
Pharmacies, medical clinics, vehicle retailers and electronics stores represent a few sectors free from vacillation, as the number of points offered has remained at the original level.
Such fluctuation, however, is not extraordinary, Abuladze said. “It is natural, it is the process of optimizing the market requirements and the entire loyalty scheme,” he said.
In June The FINANCIAL reported on a Smart Card, a loyalty card launched by TBC Bank. Abuladze said that the two cards are not in competition with each other. “I have to stress that the UNICARD is not a bank card,” he said. “… the UNICARD and Smart Card are not competitors because TBC [Bank] that launched Smart Card has linked, which is natural, its bonus programme to card payments.”
Abuladze said that the Corporation plans to further expand. In less than ten days the UNICARD is planned to be launched in Batumi. Further expansion includes other major centres such as Kutaisi and Rustavi. Besides, the project is also looking to involve new merchants. Abuladze said that it would soon include hotels, a sector thus far unrepresented in the programme.
Launched on April 8, the UNICARD programme now has 300,000 customers. Abuladze said that the Corporation plans to “at least double the number by the end of the year.” The number of transactions on the UNICARDs has reached 1 million, with the number of points accumulated being counted in the millions. About 10,000 customers have already redeemed their points for various gifts.
At the cheaper end of the spectrum, text messages and talking time for Geocell mobile users have become the most popular purchases done with the UNICARD points. Among the more expensive items, customers prefer to spend their points on home appliances, ranging from TVs to vacuum cleaners.
Temur Javrishvili, 33, says UNICARD points grow very slowly even if you buy expensive goods. “It’s better to use the loyalty cards offered by the stores themselves as discount or gift points offered by them are significantly larger,” Javrishvili told The FINANCIAL.