Sep 28 , 2010

Sobeys teams up with BMO for co-branded cards

By Robin Arnfield, News Editor

Canadian grocery store chain Sobeys has appointed BMO Bank of Montreal as its retail financial services partner, replacing an earlier relationship with Citi. As part of the deal, Sobeys and BMO have launched two co-branded rewards-based MasterCard credit cards, one in Atlantic Canada and the other in Ontario and Western Canada. A third co-branded Air Miles MasterCard will be launched in October in Quebec, David Heatherly, BMO’s VP payments products, personal and small business, tells Payments Business.

In Atlantic Canada, BMO and Sobeys have launched the No Fee BMO Sobeys Air Miles MasterCard, which offers three reward miles for every $20 spent using the new card for purchases at Sobeys and Foodland stores for the first six months. Also, when using their Air Miles Collector card, customers will continue to earn Air Miles reward miles through Sobeys and Foodland store's base and bonus programs. Thirdly, customers will receive one reward mile for every $20 spent for all other purchases, anywhere that MasterCard is accepted.

In Ontario and Western Canada, Sobeys has launched the No Fee BMO Club Sobeys MasterCard. When used for purchases at Sobeys stores in Western Canada and Ontario along with their Club Sobeys card, customers earn double the points - a total of two points for every dollar spent. Also, they will earn one Club Sobeys point for every $1 spent at any other retailer that accepts MasterCard.

Heatherly explains that the reason for the two different regional rewards programs is the fact that Sobeys offers Air Miles in Atlantic Canada and Quebec, and Club Sobeys points in Ontario and Western Canada. “In Quebec, we will be launching the IGA- and BMO-branded Air Miles MasterCard with Sobeys, which owns IGA in Quebec,” says Heatherly.

“BMO have been very flexible in allowing us to offer its cards on our different loyalty programs,” Belinda Youngs, Sobeys’ chief marketing officer, tells Payments Business.

Both Youngs and Heatherly say they are very pleased with the very strong initial response to the new credit cards in the first few weeks since their launch. An additional boost to their cardmember base will come from the fact that Sobeys is converting its existing Citi-issued MasterCard credit cardholders over to the BMO platform.

“The Citi cards were issued exclusively on the Sobeys branding, with Citi providing the underlying issuance,” says Heatherly. “We have replaced Citi as Sobeys’ banking partner. While we won’t be setting up BMO branches in their stores, we will be sending mobile sales teams in to tell Sobeys customers about our cards and other banking products, and we will be running BMO promotions in-store too. Also, we will be installing ATMs selectively at their stores.”

For BMO, the deal with Sobeys is a win-win, says Heatherly. “It gives us access to a customer base who might otherwise not have become BMO customers. Our goal is to treat the BMO-Sobeys cardholders as BMO customers, and they will be welcome in our branches.”

“Our co-branded credit cards with BMO are the first cards to be jointly issued by a Tier 1 Canadian bank and a nationwide Canadian grocery chain,” says Youngs.

Sobeys has around 1,300 stores across Canada, under the Sobeys, IGA, Foodland, FreshCo, Price Chopper and Thrifty Foods banners, as well as Lawtons Drug Stores. “We are aiming to expand our store network in BC,” Youngs tells Payments Business.





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