THE introduction of a "loyalty card", providing discounts for regular shoppers at Quinnsworth supermarkets in the Republic and Stewarts outlets in Northern Ireland, is expected to be sanctioned by parent company Associated British Foods in the new year.
An ABE spokesman said directors, headed by chairman Mr Garry Weston, were reviewing their strategy for responding to the new trading environment faced by the group's Irish food retailing activities following the arrival of Sainsbury's and Tesco in Northern Ireland.
The news came as ABE announced a strong 25 per cent increase in profits in its Irish operations - Quinnsworth/Crazy Prices, Stewarts and Penneys - to £69 million.
The success of loyalty cards in generating increased sales at outlets of Britain's leading food supermarket combines has prompted ABE to consider similar loyalty card schemes to protect the market shares held by the group's food retailing outlets in Ireland.
New computers able to accommodate the launch of a Quinnsworth loyalty card have already been installed in the Republic and installation of new computers to support the launch of a Stewarts card is expected to be completed in the new year.
If the path trodden by Tesco and Sainsbury's is taken as the model, the ABF launch of loyalty cards in Ireland could be followed by proposals for Quinnsworth and Stewarts to offer additional financial services, possibly extending to banking facilities and home loans.
Tesco has enhanced its loyalty card by paying 5 per cent interest on deposits in a budget account and by providing restricted overdrafts at 9 per cent.
The additional services are provided in partnership with NatWest. Sainsburys is launching its own bank in partnership with Bank of Scotland, limited to savings and easy payment facilities initially but expanding to include cheque books, personal loans insurance and mortgages in a year's time.
ABE's consideration of loyalty cards for customers of Quinnsworth and Stewarts was divulged in comment on the group's annual figures detailing strong growth in profits of the Irish retailing activities. Any move into financial services in the Republic would undoubtedly require a link up with one of the major Irish banks and the approval of the Central Bank.
Mr Weston said the retail companies operating in the UK and Ireland contributed excellent results with our supermarkets in the Republic of Ireland, further increasing their share of that market".
Operating profits of the retailing activities taking in the Irish supermarket chains on both sides of the Border, together with the Penneys textile retailing operation, increased as much as 25 per cent to £69 million on turnover up 8 per cent at £1.5 billion.
Although ABE does not provide a detailed breakdown of the retailing operations, it is understood that activities in the Republic contributed around two thirds of the retail sales.
Analysts' initial estimates following yesterday's surprisingly good figures suggest that Quinnsworth profits may have increased by some £5 million to around £42 million.
Profits at Crazy Prices are estimated to have been around £2.6 million and Stewarts profits at nearly £7 million sterling.
Results of the Quinnsworth and Crazy Prices outlets benefited significantly again from renewed industrial action at rivals Dunnes Stores in the shape of the two week strike during the summer which helped to lift their respective market shares.
Overall, group pre tax profits increased 15 per cent to £430 million in the year to September 14th on worldwide sales up 17 per cent at £5.71 million.
Earnings per share rose 12 per cent to 31p and total dividends are 9 per cent higher at 9.5p. The profit outcome was better than expected with analysts' forecasts ranging from £397 million to £421 million.
ABE's operating profits rose 18 per cent to £395 million, whereas investment income declined 22 per cent to £54 million, due to lower interest rates and the write down of the carrying value of the group's minority investment in the Berisford furniture business.
Buoyed by the increase in the dividend, ABE shares rose 8p to 425p, only just short of their all time high of 429p. Growth in profits is particularly notable for having been achieved on operating activities rather than from higher investment income which has sometimes tended to be the main profit driver in the past.
