Is a toaster a fair swap for your loyalty as a shopper?

How much value do loyalty cards add to your shopping experience, asks James Daley
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The Independent Online

Back in the good old days, looking for value on your weekly shopping round was a fairly straightforward task - buy one get one free, three for the price of two, 50p off: a bargain was easy to spot. But walk round Sainsbury's, Tesco, or almost any major retail store, today, and you're more likely to come across signs offering you intangible rewards such as "500 points".

Back in the good old days, looking for value on your weekly shopping round was a fairly straightforward task - buy one get one free, three for the price of two, 50p off: a bargain was easy to spot. But walk round Sainsbury's, Tesco, or almost any major retail store, today, and you're more likely to come across signs offering you intangible rewards such as "500 points".

Loyalty cards are all the rage - Boots Advantage Card, WH Smith Clubcard, Game Reward Card - the list is long, all seemingly offering you oodles of "points", which they promise will pay you great benefits and save you loads of money.

Reward cards can indeed save you money, but they also make it much harder to grasp just how much you are saving. "Buy one get one free" was pretty easy to get your head around: you pay £2 for a bottle of shampoo and you get a second bottle worth £2 for free. Total saving: £2.

With reward cards, however, 200 points may be worth £2, but it could be worth much more or much less depending on how you choose to spend it. And to make things more complicated, you will probably need to send off for a voucher, or have to apply to get your points converted into something useful - a lengthy and frustrating process, which hardly leaves you feeling that you've just bagged a bargain.

So why the switch from good old fashioned two-for-one offers to loyalty cards? Are consumers really any better off?

The sad truth is that the proliferation of loyalty cards has very little to do with value and much more to do with information.

By registering your loyalty card - with your name, address and a few other basic details - your local supermarket or Boots outlet can build up a profile of your spending habits and work out how they might extract even more money from you, by pushing targeted offers your way. If you buy more than 10 bottles of wine a month from Tesco, don't be surprised if you get a leaflet coming through your door inviting you to its wine club.

Let's face it, the total data from one family or person's shopping list for an entire year says quite a lot, especially in an age where supermarkets have moved to try to be a one-stop shop for everything their customers might ever need. How much cake do you eat every week, what CDs are you into, how many packets of contraceptives do you buy a year: the only other person to know all this apart from your partner is probably your local supermarket manager.

Tim Young, a researcher for Which?, the consumer magazine, says his organisation has nothing against the concept of loyalty cards, but warns that consumers need to realise that there is a price to pay for the use of these schemes. "Customers should be aware that retailers are collecting information that they will use to target you with other products and offers. But if you're happy with that, then you will get benefits for it," he says.

Retailers who offer reward schemes are bound by UK data protection law, and are not allowed to share the information with other companies. So if you're not too bothered that your local Tesco knows all about your unusually high consumption of whipped cream, then there's little point in not having a loyalty card.

The enemies of loyalty cards, however, complain that they are bad value - and that the cost for providing you with a free toaster every year is a far bigger increase in your overall shopping bill. If you share these concerns then there are still a handful of supermarkets you can turn to, which don't offer reward schemes but do aim to keep prices down - Asda and Morrisons being the biggest examples.

If you are willing to embrace the reward card culture, however, it is worth trying to get the most out of it. The benefits and gifts offered tend to range from products and services which are worth less than 1p for every pound you spent, up to as much as 60p in the pound.

If you are a member of the UK's largest loyalty scheme, Nectar, for example, which has a huge range of ways for you to cash in your points, you can get some 59p for every pound you spent with its very best value reward - a trip on the Orient Express to Venice.

A total of 3,000 Nectar points (which you would accumulate by spending £1,500 across most of the retailers involved in the scheme) can be exchanged for a 35 per cent discount on your Orient Express trip. Given that a full-price ticket costs more than £2,600, that's a saving of almost £900. Admittedly this is a little bit niche, and still leaves almost £1,800 to be paid for, but it does at least prove the point that value can be got from reward cards.

The typical Nectar reward is a more down to earth 1p back for every pound you spend, redeemable on your shopping at Sainsbury's. Not particularly exciting.

Tesco also typically offers 1p back for every pound spent which can be exchanged for vouchers once you've got more than 150 points. But the value of these can be quadrupled if you use your points to buy one of their special deals - such as a day out at a theme park, or a discount on your package holiday.

At the Co-op, you get more money back if you buy their own-brand products - Co-op baked beans rather than Heinz, for example - another factor worth bearing in mind.

Nick Gladding of Verdict, the retail analysts, said: "There are some good benefits for customers using reward cards, but you do have to spend a lot of money to get them. Ultimately though, consumers can see the price they need to reach to get the rewards they want, and if they don't think it's worth it, then they don't have to use these cards."

As well as Nectar, Tesco and the other straightforward reward schemes, there are an increasing number of retailers who offer combined loyalty and store credit cards. These include the likes of Marks & Spencer's &more plan.

These schemes, like reward cards, offer points for everything you buy in-store, but they also leave you with a credit balance which will be subjected to a hefty rate of interest if you don't pay it off within one or two months. These are best avoided unless you've got the discipline to pay off your balances regularly.

Whether you like them or not, it would seem that loyalty cards are here to stay, and as long as you don't have any objections to the data which is being compiled about you, there's not much point in abstaining. A couple of cinema tickets and a stainless steel frying pan every year might not seem a lot for your loyalty, but it's better than nothing.

'I object to being patronised'

Peter Looby, a freelance prop-handler for television shows, feels so strongly about the data protection issues surrounding reward cards that he has launched his own one-man campaign against them.

Starting last October by printing a small run of 50 T-shirts carrying the logo "No I don't have a f**king reward card", he now has his own company - Fat Looby - and has sold more than 8,000 of his fashion items through his website in just nine months.

"The data protection issue is abhorrent," he says. "But my main objection now is to being patronised. They expect me to believe that if I have a loyalty card, I'm getting a discount and saving money. But the cost of food has gone up to pay for loyalty cards. As Ken Morrison is proving, if you get rid of loyalty cards, you can bring food prices down."

Mr Looby is optimistic the loyalty card fad may just be a trend in the UK. He says several US firms have abandoned loyalty schemes so that they can concentrate on prices.

"The problem is people are trapped. If you're a young single mother on a low income, and the choice is to take a loyalty card and get the small rewards or to not get one, you're forced into it. But if they got rid of loyalty cards, prices could be brought down."

Until his battle is won, Mr Looby plans to continue his campaign against the UK's supermarkets. He is now also turning his attention to the Government's proposed ID card scheme, which he believes is another unnecessary invasion of people's privacy.

For more information about Fat Looby, visit

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