What price customer loyalty? Supermarket shoppers will get discounts under glitzy new schemes. But Big Brother may come to rule the till

Frances Howell looks at the latest weapon being wielded in the trolley wars WHEN YOU'VE JOINED UP

Last week, Safeway joined Tesco in launching a nation-wide customer loyalty card. For anyone who has ever used a petrol service station, the system is all too familiar. Customers are allocated "smart cards" to nestle next to their Amex. At the check-out, the card is swiped, and points are credited in line with the amount spent.

However, unlike their petrol station predecessors, supermarket card points can be redeemed against not only china, but also against the weekly shopping bill.

On the surface, these cards seem too good to be true. Instead of simply taking huge chunks out of many families' weekly income, supermarkets now profess to be giving money back.

Supermarket chains are, however, big business, not charitable organisations. If they were not getting more out of customer loyalty cards than they put in, they would not be dangling these carrots in front of you. As Roger Ramsden, director of brand marketing at Safeway, admits: "These cards generate a sufficient increase in sales to cover their cost."

Sales are not the only bonus for supermarkets. Each time that your card is swiped, it registers not only the total amount spent, but exactly what you have spent it on. The supermarkets can therefore build up a customer profile of each card holder.

Tesco claims that this will enable it to provide a personalised service, at least at mailshot level. The flipside is a Big Brother-like databank that could result in letters such as: "We note that you almost exclusively purchase pick'n'mix chocolates, croissants and chicken tikka masala. This is an extremely unhealthy diet. May we suggest that you boost your vitamin C levels by taking advantage of our current satsuma offer?"

The real plus for the supermarkets from the cards is cheap market research. But how does it add up for shopper?

The bottom line is individual customers win. The losers are likely to be specialist stores, like chemists and fruiterers, who provide some or all of the products offered by the supermarkets.

What you get depends on where you shop. Safeway's scheme differs from those of both Tesco and Sainsbury, which are only promoted in selected stores. Safeway awards points for every pounds 1 spent, whereas Tesco and Sainsbury have a minimum spend of pounds 10 to get points, which are then awarded per pounds 5 spent (in Tesco), or per pounds 10 (in Sainsbury). In Tesco and Safeway, to cash in points requires a minimum spend of pounds 250 or pounds 100 respectively, whereas Sainsbury has no lower limit.

The value of these points varies from chain to chain. Over six months, the average family of four, spending about pounds 75 per week, should get pounds 20 off their bills at Tesco and Safeway, and a princely pounds 50 off from Sainsbury.

At the other end of the scale, the pounds 10 per week shopper will earn pounds 2.50 worth of points from both Tesco and Safeway, and a marginally higher pounds 3.30 from Sainsbury.

This works out at an approximate 1 per cent discount at both Tesco and Safeway, whereas the average family of four can save 2.5 per cent on a Sainsbury Saver Card.

So, how do the supermarkets rank? In terms of discounts, Sainsbury offers the best value for the big weekly shopper. Although any money spent that falls between pounds 10 units counts for nothing, the greater return makes up for it.

If you are only spending pounds 19.99 per week, however, you might get better discounts at Safeway, which will credit you with points for pounds 9 of that pounds 9.99.

Unless you spend at least pounds 10 at each shop, and you buy in pounds 5 units, Tesco will give you points for less of your shopping than Safeway, at the same rate of return.

Tesco defends its points system on two counts. "We decided not to award a point per pounds 1, as customers then end up needing a ridiculous 800 points to get Mr Blobby cake," says Andrew Coker, Tesco's press officer.

"Also, independent research has shown that Sainsbury is 3 per cent more expensive than Tesco, and Safeway is 5 per cent more expensive."

If this is the case, then the extra discounts at Tesco's competitors are written off by the higher costs of shopping. Another catch with the Sainsbury Saver Card is that it is only used in a couple of hundred stores at a time, and for six-month stretches only. At the end of this period, unused points expire.

Cash discounts for points earned are only part of the picture for Tesco and Safeway. Safeway's ABC Card offers free products and services or family days out instead of, and to a greater value than, its cash discount equivalents.

The marketing is carefully directed: bright photographs of free chocolates and alcohol prevail in the offer catalogue. Once you have spent pounds 400, you can get both together, with a free 200g box of "famous names liqueur chocolates". Is this the sort of treat that might persuade the exhausted family shopper, with two screaming children in tow, to buy an extra can of baked beans?

Tesco is developing its Clubcard name to the full. Members are invited to celebrity wine and cheese tasting evenings, with hair product demonstrations by Nicky Clarke. Free haircuts by the man himself are not, however, on the agenda. At a return of 1 per cent, you would probably have to spend the national average annual wage, gross, before you had enough points to pay for it.

do

Take advantage of all three cards.

Think about any difference in price before you think about the discounts.

Remember that Safeway money-off points can be redeemed only in the store in which you register, so choose the most convenient one.

don't

Be tempted to spend more simply to get another point on your loyalty card.

Remember that the rate of return may only be 1 per cent, so you are better off saving your money.

Take a list and stick to it.

Suggested Topics
News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
News
Jennifer Lawrence at the Vanity Fair Academy Awards party in February 2014
people12 undisclosed female victims are seeking $100m in damages
Arts and Entertainment
Adam Levine plays a butcher who obsessively stalks a woman in Maroon 5's 'Animals' music video
music'Animals' video 'promotes sexual violence against women'
News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Voices
voicesI like surprises - that's why I'm bringing them back to politics, writes Nigel Farage
News
Bear and hare woodland scene from John Lewis Christmas advert
newsRetailer breaks with tradition, selling real festive fir trees online for the first time
Arts and Entertainment
Anthony Horowitz will write the next 007 novel
booksAnthony Horowitz to write new instalment in spy series for 2015
News
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
people
News
people

Kirstie Allsopp has waded into the female fertility debate again

Sport
Kicking on: Nathaniel Clyne is relishing the challenge of the Premier League after moving from Crystal Palace
footballSurprises include a first ever call-up for one Southampton star
Voices
4 May 2013: The sun rises over Tower Bridge in London. Temperatures across the UK could be higher than several European holiday destinations by Monday, including parts of Italy and France (Andy Hepburn/PA)
voices
News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
Extras
indybest
Finacial products from our partners
Property search

Simon Read: The timeshare battle intensifies with Macdonald Resorts

An action group of disaffected Macdonald owners are now readying for their own legal battle with the company

Debt problems: How you can nip your money problems in the bud and sleep easy at night

Money worries are keeping more than 7 million of us awake at night

Venture Capital Trusts: You will love the tax-free income

To encourage investment in this higher-risk area, the Government offers generous tax relief to those who invest in new issues of VCT shares

Runaway debt: It's the new norm for university students now

StepChange, the debt charity, has revealed that students who called its helpline in 2013 had racked up average debts of £7,818

Michael's crisis could have 'dragged on for a long time', says CPA adviser Ruth Millward, right

More than 300,000 adults are too deeply in debt to apply for bankruptcy

Charities are urging the Government to offer a cheaper alternative for people in financial difficulty

Scottish independence: How will kilt-edged stocks fare?

Scottish companies were caned when the separatists surged in the polls. Is this the future, asks Simon Read, and would they be any better together?

Two million first-time buyers are locked out

The drought in lending to people with low deposits has created legions of frustrated buyers, writes Emma Lunn

Leaving money to charity in your will could help reduce the tax bill for your loved ones

Next week has been designated "remember a charity in your will week", to put the focus squarely on the subject
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Italian couples fake UK divorce scam on an ‘industrial scale’

    Welcome to Maidenhead, the divorce capital of... Italy

    A look at the the legal tourists who exploited our liberal dissolution rules
    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    The vintage series has often been criticised for racial stereotyping
    An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

    An app for the amorous

    Could Good2Go end disputes about sexual consent - without being a passion-killer?
    Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

    Llansanffraid is now Llansantffraid

    Welsh town changes its name, but can you spot the difference?
    Charlotte Riley: At the peak of her powers

    Charlotte Riley: At the peak of her powers

    After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
    She's having a laugh: Britain's female comedians have never had it so good

    She's having a laugh

    Britain's female comedians have never had it so good, says stand-up Natalie Haynes
    Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

    Let there be light

    Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
    Great British Bake Off, semi-final, review: Richard remains the baker to beat

    Tensions rise in Bake Off's pastry week

    Richard remains the baker to beat as Chetna begins to flake
    Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

    A look to the future

    It's time travel fashion at Louis Vuitton in Paris
    The 10 best bedspreads

    The 10 best bedspreads

    Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
    Arsenal vs Galatasaray: Five things we learnt from the Emirates

    Arsenal vs Galatasaray

    Five things we learnt from the Gunners' Champions League victory at the Emirates
    Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?