Navigating New Supermarket Loyalty Challenges
By Jennifer Meierhans, Business Reporter | May 30, 2024
Recent developments in supermarket loyalty programs, aimed at rewarding shoppers with extra points for increased spending, have raised concerns about potential overspending. Major UK supermarkets like Tesco, Sainsbury’s, Asda, and Morrisons now offer bonus points to loyalty scheme members who meet certain spending targets.
While these supermarkets assert that their loyalty schemes provide customers with better value and personalized savings, consumer advocacy groups such as Which? and the debt charity StepChange warn that these shopping challenges might push consumers to spend beyond their means.
These challenges represent a new phase in the evolution of supermarket loyalty card schemes, which are becoming increasingly complex. Notably, this shift coincides with a significant rise in food prices, which last year surged by nearly 20% – the highest rate since the 1970s – though they are now stabilizing.
Ele Clark, retail editor at Which?, commented on the intense competition among supermarkets, stating, “Competition among supermarkets is fierce, with all of them highlighting price drops. However, the reality is that food remains significantly more expensive than it was a few years ago.”
Ged Futter, a former Asda buyer who now advises suppliers on retail negotiations, explained that these personalized challenges and rewards are strategies for supermarkets to retain customers. “They analyze your monthly purchases and offer deals to ensure you continue buying those products from them,” he said.
Each supermarket’s challenges differ, requiring customers to shop more frequently or reach specific spending thresholds within a set timeframe.
The Gaming Element
Jo Rourke, a single mother of three from Manchester, cautions shoppers about the potential pitfalls of these loyalty card challenges. “The term ‘challenges’ can make it seem like a game, which can be risky for those inclined towards such activities,” she said. Rourke, who shares grocery saving tips on her social media (@thismumcooks), believes it’s more beneficial to shop around rather than remain loyal to one supermarket. “It’s more worthwhile to compare prices across various supermarkets,” she noted.
Research by Kantar suggests that the average shopper holds loyalty cards for three different supermarkets. Here are some tips for managing these schemes effectively:
- Know Your Prices: Understand the regular cost of items you frequently purchase to recognize genuine deals.
- Compare Per Unit Price: Look at the price per 100g to ensure loyalty prices are actually cheaper.
- Stick to Your Budget: Avoid overspending despite enticing offers or challenges.
- Bulk Buy Staples: Use coupons or vouchers to buy long-lasting essentials like pasta, rice, or canned foods.
- Leverage Technology: Use comparison apps to track favorite items and get price drop alerts.
Consumer Protection Concerns
Mrs. Clark from Which? emphasized the need for supermarkets to avoid overhyping these challenges, which could lead shoppers to spend excessively. The organization is investigating whether these loyalty prices genuinely benefit consumers or if they might be misleading, and how they impact shopping habits and competition among retailers. Findings from this investigation are expected in July.
Simon Trevethick, head of communications at StepChange, noted the potential risks of these schemes. “While loyalty programs can offer valuable discounts, they can also prompt consumers to spend more than intended,” he said, urging those facing financial difficulties to seek assistance from the charity.
In response to concerns about promoting overspending through loyalty challenges, a Tesco spokesperson stated that their Clubcard challenges are designed to reward regular purchases. Sainsbury’s explained that their Shop for Points challenge is offered selectively, with bonus points issued based on the number of completed store visits and a minimal qualifying spend of £1 per store. Asda and Morrisons did not provide comments.