The UK’s competition watchdog has been urged to investigate two big retailers over their so-called customer loyalty card schemes.
An investigation by Which? uncovered that Tesco and Sainsbury’s have been increasing prices on some products, before later offering them to loyalty card holders at a lower price.
The consumer group analysed 141 Clubcard and Nectar card prices, tracking them back six months to find that around a third of the member-only promotions were at their so-called “regular” price for less than 50 percent of the six-month period.
Both Sainsbury’s and Tesco said Which? had failed to take inflation into account when analysing prices, and stressed that they adhered to Trading Standards rules on promotions.
Which? identified three recurring problems around the “regular” price quoted for products on offer to customers with loyalty cards—that they were far more expensive than at other supermarkets, that they had been changed right before the promotion, or were only available for a short amount of time.
Price Hiking
Among the deals of concern to Which? was a jar of Nescafé Gold Blend Instant Coffee (200g) advertised at Sainsbury’s for £6 with a Nectar card—a saving of £2.10 on the “regular” price of £8.10.
However the regular price had also been £6 at Sainsbury’s until it went up to £8.10 just two days before the Nectar price launched.
Which? also found the regular Sainsbury’s price was significantly higher than at other supermarkets, such as Asda, where the same jar cost £7, or at Morrisons, Ocado and Waitrose where it was available for £6. It was even cheaper at Tesco (£5.99) and at Lidl (5.49).
In another example, Which? found Heinz Salad Cream (605g) at Tesco with a Clubcard price of £3.50 and a regular price of £3.90, even though its regular price had been £2.99 for several weeks before it was increased to £3.90—just 22 days before the Clubcard promotion.
Which? found the condiment has been its regular price for just 25 days out of 183, or 14 percent of the previous six months.
Overall, Which? found a third of the products at Sainsbury’s—34 percent of 71 products—were the “regular” price less than half the time over the previous six months. At Tesco, the same was true for 24 percent of the 70 items analysed.
As well as being clear and not making unfair price comparisons, current regulator guidance dictates that it is important that if a proposed pricing practice explicitly or by implication indicates a saving against another price, the quoted saving is genuine and can be trusted by shoppers.
Which? said it had shared its findings with the Competition and Markets Authority (CMA) and asked them to look at whether supermarkets could be hiking their “regular” prices to make loyalty scheme customers feel they are getting a discount.
Flawed
Responding to the Which? findings, a Sainsbury’s spokeswoman said: “Nectar Prices offer our customers the opportunity to make genuine savings across 5,000 products. Which? fails to recognise that base prices have been increasing throughout the year due to inflation.“Our promotional rules around Nectar Prices are informed by the guidance from Trading Standards.”
The spokesperson said the Nescafe Gold example used by the consumer watchdog demonstrates its “flawed methodology” as the claim that the “regular” price was £6 is untrue.
Sainsbury’s added: “The base price of this item has been £8.10 since December 2022 and £6 was a promotional price throughout this year, including on Nectar Prices when it launched in April.”
A Tesco spokesman said its “Clubcard Price” promotions follow strict rules, including considering how they compare against prices in the market,” to ensure they represent genuine value and savings for our Clubcard members.”
“These rules have been endorsed by our Trading Standards Primary Authority,” Tesco said.
Which? also raised concerns that not all customers were able to sign up to the loyalty schemes in the first place, with age and address-based restrictions as well as digital requirements leaving groups such as young parents and carers, school children buying lunch and those in temporary accommodation potentially excluded from benefiting from lower prices—and possibly paying inflated normal prices.
Sue Davies, Which? head of food policy, said: “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.”
The latest Which? investigation comes just months after privacy campaigners raised concerns over how supermarkets are using loyalty cards to amass vast amounts of detailed information on customers.
Big Brother Watch said retailers can use the data to push special discounts or offers on customers.
They warned the cards could become a “gateway for personal data exploitation under the guise of cost-saving offers.”
Jake Hurfurt, head of research and investigations at the civil liberties group said: “Customers should be able to freely choose whether they want to hand over their data to big companies, rather than feel pressured by the promise of huge savings on their shopping bills.”
