(qlmbusinessnews.com Thurs. 28th Nov, 2024) London, UK —
Supermarket Loyalty Cards Found to Offer Genuine Savings, Watchdog Confirms.
UK supermarkets are providing real savings through loyalty cards, according to an investigation by the Competition and Markets Authority (CMA). However, the watchdog has urged consumers to remain cautious and compare prices before committing to purchases.
The CMA reviewed 50,000 loyalty price promotions across major chains including Tesco, Sainsbury’s, Morrisons, Co-op, and Waitrose. It found minimal evidence that supermarkets artificially inflated standard prices to make loyalty discounts seem more appealing.
Despite the validity of these savings, public trust remains an issue, with 40% of consumers sceptical about whether loyalty card prices genuinely reflect value for money. “We know many people don’t trust loyalty card prices, which is why we conducted a thorough review to ensure shoppers are being treated fairly,” said George Lusty, interim executive director of consumer protection at the CMA.
Loyalty pricing typically involves two-tier pricing, where a discounted price is available to customers with loyalty cards or apps. The CMA discovered that in nearly 90% of cases, these offers represented authentic discounts compared to standard in-store prices, with average savings ranging from 17% to 25% across the reviewed supermarkets.
Consumers Divided Over Trust in Loyalty Pricing.
A survey accompanying the investigation revealed that nearly 70% of shoppers believe loyalty schemes deliver decent savings. However, mistrust persists, particularly among younger shoppers, with over 70% of 18 to 29-year-olds suspecting that non-loyalty prices are inflated.
Two major retailers, Aldi and Asda, were excluded from the analysis. While Asda offers a points-based rewards scheme, it does not provide lower product prices for loyalty members. Aldi and Lidl, known for their limited product ranges and lack of online sales, were also not included in the study.
Consumer group Which? praised the CMA’s findings as reassuring but highlighted ongoing concerns about loyalty pricing. Sue Davies, head of food policy at Which?, pointed out that millions of customers may miss out on these deals if they haven’t signed up for loyalty programmes.
The Role of Data Collection in Loyalty Schemes.
Supermarkets benefit from loyalty schemes by gathering extensive customer data, enabling them to analyse buying behaviours and create personalised offers. Some even sell this data to suppliers for targeted advertising, making these programmes lucrative for retailers. For instance, Sainsbury’s expects its Nectar360 loyalty platform to generate £100 million in additional profits over the next three years.
While only 7% of shoppers reported avoiding loyalty schemes due to privacy concerns, attitudes towards data collection vary. Critics, including Annich McIntosh of *Loyalty Magazine*, have questioned the morality of requiring loyalty sign-ups for discounts, though she acknowledges these schemes may help slow price increases.
The CMA concluded that while loyalty cards deliver genuine savings, shoppers should remain vigilant, as loyalty pricing is not always the most affordable option.
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