More work needs to be done to win the hearts, minds and loyalty of shoppers after a recent report from the Competition and Markets Authority (CMA) highlighted that 55% of people think ‘usual’ prices are upped to make loyalty deals more appealing.
This is according to FMCG and retail consultancy The Category Management Company, which believes that price can’t be the only aspect of loyalty cards if they are to represent true value for all parties.
“It’s true that in its recent review of 50,000 loyalty-priced products, the Competition and Markets Authority showed 92% offered genuine savings against the usual price with an average saving of 17-25% buying loyalty-priced products at the five supermarkets examined (Tesco, Sainsbury’s, Waitrose, Co-op and Morrisons),” said Patrick Finlay, Managing Director of The Category Management Company.
“Clearly, done well, it pays dividends, especially for the likes of Tesco and Sainsbury’s, for whom market share is growing.”
However, Finlay noted that the report’s finding that over half of people think ‘usual’ prices are upped to make loyalty deals more appealing is in line with a similar 59% cited by Retail Week earlier in 2024.
He said: “This is worrying, as it demonstrates a lack of trust in retailers and their suppliers, with 76% of shoppers saying that loyalty pricing has not changed where they shop as loyalty cards, in their current form, are designed just to reward and retain loyal customers. They exist as a vehicle for elevated competitiveness and market share, to attract new customers and encourage them to spend more.”
Finlay believes retailers need to get under the skin of what motivates shoppers by finding ways of creating meaningful connections, particularly in a less-than-stable post-budget environment.
“The role of loyalty cards must go beyond price; they need to have long-term ambitions to attract and lock customers in. This will require an in-depth understanding of what truly makes shoppers tick,” said Finlay.
He cites Morrisons as an example, which, as part of its turnaround strategy, has prioritised product availability. Budget has been committed to improving the customer experience, getting more people back on tills, making sure shelves are restocked in a timely fashion and expanding its loyalty programme. It has also just announced a significant change to its loyalty scheme, allowing shoppers to earn more points towards their purchases. Finlay noted that seeing loyalty in the context of overall shopper requirements and the overall shopper experience is essential.
He revealed that in the development of a range of category strategies over the course of 2024 by The Category Management Company, price rarely reared its head in terms of what really mattered to consumers and shoppers in terms of long-term prosperity and happiness. It’s all about the importance of family, mental wellness, the environment, health and security.
Finlay concluded: “So, as an industry, we will always need to acknowledge the importance of price for short-term gain but also look beyond it to build true loyalty and trust by looking deeper and beyond it. Perhaps only then can meaningful loyalty be achieved.”
