National drugstore chain Walgreens has just purchased the Duane Reade chain of New York City drugstores. While others ponder the anti-competitive effects of such consolidation, I'd like to share an anecdote regarding Duane Reade which may help answer the question posed in the title.
For many years, Duane Reade's customer loyalty program granted a $5.00 coupon for every 100 "points". Aside from occasional promotions, points were credited at the rate of one point for each dollar in purchases. Allowing my purchases to be tracked seemed a fair price to pay in return for a 5% discount.
At the start of this year, on the heels of its purchase by Walgreens, Duane Reade heavily promoted a new program. Touted as a feature (both in promotional materials and on receipts) is the fact that "[t]he point conversion will change from 1 point for every dollar to 2 points for every dollar with this new FlexRewards Program". "Great", I thought, until I smelled a rat, plowed through some fine print and discovered that the $5.00 discount is now given at for 500 points (i.e. $250 in purchases), reducing what had been a 5% discount to 2%.
Granted, Duane Reade is not obliged to offer me any discount at all. I wish, however, that there were some price to pay (beyond my own indignation) for so callously insulting the intelligence of customers.