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
Saturday 21 October 1995
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.
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.
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.
16 August 2014 12:00 AM
08 August 2014 11:30 PM
08 August 2014 11:30 PM
01 August 2014 07:30 PM
The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read
01 August 2014 07:30 PM
25 July 2014 11:00 PM
25 July 2014 11:00 PM
A London estate agent yesterday put a price on having a garden. David Pollock of Greene & Co reckons it can increase a property's value by a tenth.
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
25 July 2014 11:00 PM
25 July 2014 11:00 PM
Payday loan firms have been accused of bombarding financially vulnerable people with nuisance phone calls, after a debt charity reported that a third of its clients were plagued by the messages.
How couples can protect their financial interests when cohabiting
Four million signed up for company pension scheme following government’s auto-enrolment
Money alert: Overdrafts at HSBC and First Direct
How to protect your assets if the stock markets begin to head south again
Buyers beware of new-build home headaches
- 1 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 2 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...
£600 per day: Harrington Starr: .NET Developer C#, WPF,BLL, MSMQ, SQL, GIT, SQ...
£65000 per annum: Harrington Starr: A financial software vendor at the forefro...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony