Rival to Tesco card likely

SAINSBURY, the supermarkets group, is poised to launch its own "loyalty" card at the end of this month in direct competition to Tesco's successful "Clubcard", industry sources say.

The move would be a big U-turn for the group's chairman, David Sainsbury, who in February called the Tesco scheme a waste of money that would bring no benefit to its customers.

But Sainsbury is understood to be increasingly concerned about the apparent success of the Tesco scheme. Last week, Tesco reported that its Clubcard had already attracted 5 million members, helping to boost underlying sales growth by 7 per cent, compared with an industry average of 3.5 per cent.

Analysts believe that most, if not all of Tesco's rivals will have similar systems in place by the end of the year.

According to David McCarthy, food retailing analyst with BZW: "A scheme like Tesco's restricts the ability of its competitors to use price to lure away customers."

At the time of the Tesco launch, Mr Sainsbury argued that he preferred to concentrate on straightforward price cuts. "The best customer club is one that consistently offers the best money," he said. Tesco's scheme, he argued, would cost £10m simply to run.

Under the Tesco scheme, customers earn points for every £10 they spend. These are redeemable against products.

Sainsbury denied it had plans for a loyalty card but said: "We will continue to keep our position under review."