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Tesco and Sainsbury’s accused of loyalty card ‘tricks’

Rebecca Goodman
Written By:
Rebecca Goodman

Tesco and Sainsbury’s have been accused of making savings on loyalty offers seem better than they actually are by a leading consumer group.

It also found that some customers were being excluded from cheaper loyalty prices altogether and said the shops were using ‘potentially dodgy tactics’.

Which? looked at 141 prices across the Clubcard and Nectar loyalty schemes, which give customers who have signed up to either scheme cheaper prices, and tracked these prices for the past six months.

Many supermarkets have launched cheaper prices and loyalty discounts this year, in response to soaring food costs and high inflation. The Nectar Prices scheme launched in April and Tesco has been offering Clubcard holders cheaper prices since 2019.

When items are included in the loyalty scheme, their regular price is displayed so customers can see how much money they are saving when compared to the regular price. Yet these schemes have been criticised before, and in June, Tesco was reported to the regulator by Which? over unfair pricing in its loyalty scheme.

Regular prices change often and are more expensive

Of all the products analysed, the group found that 34% of Sainsbury’s products were the regular price (the price when not included in the loyalty scheme) less than half of the time over the last six months and at Tesco it was 24% of items.

The group said the regular prices shown to customers were only available for a short period of time, often changed just before a product was included in the loyalty scheme, and were regularly more expensive than other supermarkets.

One example was a 200g jar of Nescafe Gold Blend Instant Coffee for £6 for customers with a Nectar card, a saving of £2.10 on the usual price of £8.10. But Which? said the product price had increased from £6 to £8.10 just two days before it was included in the loyalty scheme.

The same product was also more expensive at Sainsbury’s. At Asda was £7, at Morrisons, Ocado and Waitrose it was £6, at Tesco it was £5.99 and at Lidl it was £5.49.

Another example from Tesco was a 605g jar of Heinz Salad Cream for £3.50 for Clubcard customers. The usual price for the product was £3.90 but 22 days before it was included in the loyalty scheme it was £2.99.

Age and address-based restrictions

Many customers were also not able to sign up to the Clubcard and Nectar schemes. The group said there are often age and address-based restrictions and digital requirements that exclude some people from joining.

The group has shared the findings of its latest investigation with the Competition and Markets Authority (CMA). It has asked it to look into whether supermarkets are inflating their regular prices, those not included in loyalty deals, to make customers who have signed up to loyalty schemes think they are getting a discount.

Current guidance from the CMA states that supermarkets need to be clear and cannot make unfair price comparisons. It also says that savings must be genuine when a product is shown as being cheaper than another price.

‘We make every effort to be transparent’

Sainsbury’s told Which? that due to inflation, many products had increased in price over the past six months and Sainsbury’s own inflation rate had been behind many of its competitors.

It added: “We make every effort to be transparent about how customer data is used at Nectar. Customers can find more information on this in the privacy policy on our website.”

Tesco told Which all its Clubcard Price promotions followed strict rules, including looking at how they compared against prices at other supermarkets, to ensure they represented genuine value and savings. It said these rules had been endorsed by Tesco’s Trading Standards Primary Authority.

Loyalty deals ‘not all they’re cracked up to be’

Sue Davies, Which? head of food policy, said: “It’s not surprising that shoppers are questioning whether supermarket loyalty card prices are really a good deal, as our investigation shows that up to a third of loyalty offers at Tesco and Sainsbury’s are not all they’re cracked up to be.

“As member-only pricing continues to grow, the sector, its pricing practices and who is eligible for membership needs to be properly scrutinised so that all shoppers – including society’s most vulnerable – can benefit and no one is misled into buying things they wouldn’t have usually bought or which isn’t quite the deal they believe it to be.

“Which? is calling on supermarkets to make sure that their loyalty card prices don’t mislead and for the regulator to look more closely at this growing trend towards dual pricing. There is also the important issue of whether it is right for certain groups to be excluded from member-only schemes.”