Despite concerns raised by consumer groups that loyalty pricing schemes could be misleading, the Competition and Markets Authority (CMA) has today ruled that shoppers are being offered genuine savings.
As part of its investigation that was launched at the beginning of the year, the regulator analysed around 50,000 grocery products on a loyalty price promotion in the likes of Tesco, Sainsbury’s, and Morrisons. It found that 92% offered genuine savings against the ‘usual’ price, despite 55% of people thinking ‘usual’ prices are upped to make loyalty deals seem more appealing.
Earlier this year, consumer watchdog Which? called for action to tackle “murky and confusing loyalty pricing practices” after its latest research found that some deals may not be as good as they appear. It has also raised concerns that certain groups of people are being “excluded” from accessing lower prices offered to members of retailer loyalty schemes. This is because of minimum age and address requirements, as well as people not having email addresses or access to an app.
Whilst the CMA’s probe found “very little evidence” of supermarkets inflating their ‘usual’ prices to make loyalty promotions seem like a better deal, it did call on retailers to improve access to their schemes.
George Lusty, Interim Executive Director of Consumer Protection at the CMA, said: “We know many people don’t trust loyalty card prices, which is why we did a deep dive to get to the bottom of whether supermarkets were treating shoppers fairly. After analysing tens of thousands of products, we found that almost all the loyalty prices reviewed offered genuine savings against the usual price – a fact we hope reassures shoppers throughout the UK.
“While these discounts are legitimate, our review has shown that loyalty prices aren’t always the cheapest option, so shopping around is still key. By checking a few shops, you can continue to stretch your hard-earned cash.”
The CMA’s study found that consumers can make an average saving of 17-25% buying loyalty-priced products at the five supermarkets examined: Tesco, Sainsbury’s, Waitrose, Co-op, and Morrisons. However, 76% of shoppers surveyed by the regulator stated that loyalty pricing has not changed where they shop, although 24% now compare prices more due to their introduction.
Meanwhile, 43% said they think it is unfair that loyalty scheme members pay lower prices for some products than those without a membership. The CMA noted that there was room for improvement regarding people’s ability to access loyalty schemes. It said that some supermarkets could do more to ensure people without smartphones or under 18s can access the deals. The regulator suggested that stores could introduce offline sign-up options in-store or via telephone, whilst lowering the minimum age for joining a scheme.
The CMA also found no evidence that consumer laws were being breached by the way supermarkets collect and use people’s data when they sign up to a loyalty scheme. Only 7% of those surveyed said they hadn’t signed up to a scheme due to personal data concerns.
Commenting on the findings, a spokesperson for Tesco spokesperson said: “Clubcard Prices has always been about offering genuine savings and rewards to our customers, and we are pleased that this has been evidenced by the CMA.
“We are always working to find the best possible deals for our customers, and with around 8,000 products included in Clubcard Prices every week, we’re helping customers to save up to £385 a year off their groceries.”
Sue Davies, head of food policy Which?, responded: “Two-tier loyalty pricing has become a common practice across retailers. It’s therefore reassuring that the CMA has found that most of the prices it looked at across supermarkets offered genuine savings against the usual price.
“However, it stresses that it is worth shopping around as they aren’t always the cheapest option.”
Meanwhile, Mark Jones, partner at law firm Gordons and an expert in the grocery sector, said: “We haven’t learnt a great deal from the CMA’s investigation, which confirmed that, in general, participating in a loyalty scheme means savings for consumers.
“There were a few nuggets of interest, including that Tesco and Sainsbury’s are streets ahead on participation. 77% of those responding to the CMA’s survey had a Tesco Clubcard and 57% a Nectar card under the Sainsbury’s loyalty scheme. The other retailers are at around 30% or below.
“The main reason people don’t have a loyalty card for a supermarket is because they ‘don’t shop there often enough’, which suggests loyalty schemes alone probably don’t encourage consumers to switch to a supermarket. This is backed up by another finding by the CMA, being that 76% of shoppers said loyalty programmes haven’t changed where they shop. Bearing in mind that Sainsbury’s and Tesco have held or increased their market shares over the previous four years, perhaps the takeaway is that loyalty schemes don’t change where people shop, but they may persuade them to stay.”
NAM Implications:
- A fact-based endorsement for loyalty pricing!
- A 10-month analysis of:
- around 50,000 grocery products
- on a loyalty price promotion in the likes of Tesco, Sainsbury’s, and Morrisons
- finding that 92% offered genuine savings
- against the ‘usual’ price,
- despite 55% of people thinking ‘usual’ prices are upped to make loyalty deals seem more appealing
- How many new loyalty cards have you added to your collection recently?
