Chase Announces Grocery Deal as Food Shoppers Demand Cash-Back Rewards

Chase is targeting consumers’ demand for food deals with new cash-back offers, a move that comes as consumers seek card-linked offers from grocers.

The banking company announced Friday (Dec. 15) the new 5% cash-back categories for the first quarter of 2024 — categories that rotate every quarter — and the list includes deals at grocery stores as well as at leading grocery aggregator Instacart.

“We’re starting 2024 with a fresh twist on resolutions by introducing new themes for Freedom Flex’s quarterly bonus categories,” Chase Freedom General Manager Brent Reinhard said in a statement. “…We want our card members to embrace the new and experience the joy of cash backing while focusing on their health, relaxation and nourishment.”

Discount retailers and warehouse chains are excluded from this offer, which pertains primarily to pure-play grocers and supermarkets.

The announcement comes amid strong demand for card-linked grocery offers. The study “Leveraging Item-Level Receipt Data: How Card-Linked Offers Drive Customer Loyalty,” a PYMNTS Intelligence and Banyan collaboration, found that roughly 6 in 10 of those who are likely to use a product-specific card-linked offer program in the next three months — or about half of consumers overall — are very or extremely likely to use card-linked offers for grocery purchases in that same period.

Grocery offers are disproportionately in demand, according to the study “Leveraging Item-Level Receipt Data: How Personalized Card-Linked Offers Drive Store Card Usage,” also created in collaboration with Banyan. The report, which drew on responses from a panel of more than 2,000 U.S. consumers, noted that among all categories included in the survey, new shoppers and loyal shoppers were the most interested in receiving personalized card-linked offers from grocery merchants.

Specifically, 61% of cardholders reported being interested in receiving relevant store card-linked offers from grocery store cards, with 44% saying they would be most interested in receiving offers for that type of store card than any other category.

The demand for grocery offers comes at a time when consumers are feeling financial pressures affect their ability to afford basic needs such as food and beverages. The PYMNTS Intelligence study “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which drew from a survey of more than 2,000 U.S. consumers, observed that 57% of consumers reported having cut down on nonessential grocery spending. Plus, 47% traded down to grocers with lower prices. Moreover, one-third said they had downgraded from their favorite brands.

Kroger, the nation’s leading pure-play grocer, has been noticing this trend.

“As we’ve seen over recent quarters, our customers are actively looking for value, and our budget-conscious customers are under more significant spending pressure,” Kroger Chairman and CEO Rodney McMullen noted on the company’s most recent earnings call. “…We’ve seen a great response from all customers to [our] offers, but engagement from our budget-conscious households has been especially strong.”

Chase’s decision to target consumers’ desire for food deals through new cash-back offers aligns with the current market trends. As consumers continue to prioritize value and affordability, firms that prioritize cash-back deals for grocery stores and eGrocery channels are likely to attract many cardholders.