What shoppers really think about supermarket loyalty schemes

 Supermarkets have flooded the market with next-generation loyalty schemes to give back to their customers – but do shoppers actually think of them as a reward? And after speculation about their value, do they trust that the prices they see are genuine? 

To find out, Retail Week asked consumer research firm Walnut Unlimited to survey 2,000 shoppers about their thoughts on the schemes.

What’s overwhelmingly clear from the research is that although supermarkets are hopping on the member prices/loyalty scheme bandwagon left and right, and most consumers are part of at least one, many shoppers don’t like them.

The systems may be designed to reward shoppers for their loyalty but 42% of consumers say they are unsure or disagree that loyalty card prices offer good value. 

 

This fluctuates based on age, so younger and older age groups are more likely to agree that loyalty prices offer them good value, but middle-aged groups, which include most of the UK’s family households, are significantly less likely to agree that these schemes are good value for them. 

“This group has the most exposure to retailer prices and is likely to be conducting large shops on a more regular basis,” says Wanut Unlimited research director Amy Nichols.  

“Supermarkets need to pay attention to this. On one hand, it is encouraging that younger customers see the loyalty card prices as offering good value – this bodes well for the future and reinforces any brand messages around value for that retailer. However, supermarkets need to explore why UK families are less likely to feel that the schemes are offering them value.”

 

When we look at the gender split, women are more likely than men to feel that loyalty prices offer good value but that’s because women are more likely to engage in loyalty schemes in general.

Trust the price

An incredible 57% of UK shoppers have doubts about whether the RRP displayed next to a loyalty price is real, or has just been hiked up to make the member price look great. 

 

The narrative that supermarkets were tweaking prices swirled around the national press in autumn last year and has been disputed by the retailers in question, but it was crystallised earlier this year with the Competition and Markets Authority (CMA) announcing its yet-to-be-published investigation into the claims.

The CMA said: “With the rise in some supermarkets making cheaper prices only available for loyalty card members, the CMA announced that it would begin a review of loyalty pricing by supermarkets in January 2024.

“In line with that announcement, our review of loyalty pricing started this month. The review is part of a programme of work by the CMA to help tackle cost-of-living pressures in the groceries sector.”

”

 

Higher again is the percentage of shoppers who think discounts have been inflated to look better, with 59% of them in agreement that they have been. 

Given the narrative, and the heftiness of the discounts, it makes sense that there is some cynicism from the public about the deals. Our data shows that it’s certainly something supplier brands should consider before investing in a member-price promotional cycle over traditional offers. 

When we drill down into the demographics, it’s the more affluent shoppers who are most suspicious of the deals being dodgy, so those trying to appeal to that base should be particularly careful about their choice. 

Murky waters

More than half of shoppers say that these schemes have made it more difficult for them to figure out which retailer is offering the best value. This is only likely to increase as more retailers flesh out their pricing schemes. 

 

 

“With deals regularly changing, and loyalty schemes moving to have much more of a focus on discounts rather than rewards, shoppers are finding it harder to maximise the value they get,” says Nichols. 

“Shoppers feel they now need to keep an eye on prices to make sure they are getting the best prices. This is particularly relevant to shoppers who shop at multiple supermarkets – the trend of shopping around for specific prices will increase.”

Who has what?

Despite the ire that shoppers have surrounding member prices, it hasn’t stopped them signing up to these schemes in their droves. 

 

 

A whopping 94% of consumers own at least one supermarket loyalty card, with the most popular one owned by 79% of the population tallying with the biggest grocer, Tesco. 

Second is Sainsbury’s Nectar, owned by 63%, followed by Morrisons More with 36% ownership and Asda Rewards coming in fourth with 33%. 

 

 

When looking at the split by age, it shows that Tesco has a solid position among all age groups, although it under-indexes slightly with 25-34-year-olds.

Asda Rewards and Sainsbury’s Nectar card memberships are favoured among younger shoppers, while there is a significant increase in older shoppers holding Co-op Membership and My Waitrose cards.

Changing behaviour 

Another aspect of the new schemes that is bugging shoppers is having to shell out full-price or even abandon their entire shop when they realise they’ve forgotten their loyalty card. 

 

 

Fourteen per cent of shoppers say they’ve walked away from a shop because they couldn’t access their details, presenting a huge risk to retailers and a dramatic behaviour change for shoppers in a bid to secure lower prices. 

This also does not count the number of shoppers who have changed the types of products they’re purchasing, or the volume, when they realise they can’t access the member prices. 

The shift represents a huge step-change from traditional reward programmes where shoppers may be disappointed they wouldn’t accrue points for their shop but the disappointment would be unlikely to deter them from the shop entirely. The new schemes may have transformed from a reward to just another discount.

“Despite the potential mistrust in the supermarket loyalty discount prices, customers are likely to start feeling like there is no choice but to sign up to each retailer’s loyalty scheme,” says Nichols. 

“This subtle change from reward to discount means customers need to use their loyalty card simply to get access to the lower prices. If they don’t believe the discount to be genuine this may cause trust and loyalty issues with otherwise loyal customers.”

Source: retail-week.com