Tesco to relaunch Clubcard scheme with £150m campaign

Tesco will kick off a drive to wrest back customers from its big three grocery rivals during the recession with a £150m relaunch of its Clubcard next week, the biggest change to its loyalty card scheme since it launched 15 years ago.

The UK's biggest supermarket said it hoped to attract 1 million new customers to its loyalty card, bringing its total to 16 million, which is about one in two UK households. The relaunch next week will enable customers for the first time to exchange their Clubcard vouchers for double value rewards tokens in store and online on a wide variety of products, including nappies, clothing, toys, cosmetics and Tesco Mobile top-ups.

Carolyn Bradley, the UK marketing director at Tesco, said: "In the current market when people are shopping around for bargains loyalty is more important than it has ever been."

The relaunch comes at a time when Tesco has been losing market share to its big three rivals, J Sainsbury, Morrisons and Asda, although the world's third largest retailer claims it has stemmed the loss of sales to the discounters Aldi and Lidl in the UK. For the 12 weeks to 20 April, Tesco sales were up 4.6 per cent, behind Sainsbury's 8.1 per cent gain, Asda's 8.0 per cent and Morrisons' 7.4 per cent, according to TNS Worldpanel. Of its three rivals, only Sainsbury's, which is part of the Nectar scheme, has a loyalty card.

Previously, Tesco customers could only spend Clubcard vouchers at face value in its stores and online or increase the value by up to four times by exchanging them for deals with its partners, such as operators of Airmiles, theme parks or restaurants. But now a customer will be able to exchange £5 of Clubcard vouchers for £10 of double reward tokens and buy a women's jeans and T-shirt outfit for £10, for example.

For the designated double-up product categories, customers can exchange their vouchers for reward tokens at any time, but then have to use them within three months. However, for certain wine and gardening products, they have to exchange the vouchers by 30 September 2009 and spend the tokens before 30 December.

David McCarthy, the consumer analyst at Hobart Capital Markets, said: "We had been hoping that the Club Card relaunch would be a major innovation that would help Tesco regain the initiative, but overall we are disappointed. It is true that if a customer has vouchers now, he or she will be able to get double value immediately on many items. The heavy promotional launch will help short-term sales, but we are unconvinced that this campaign will lead to any change in underlying trends."

Tesco will launch "Clubcard double-up" on Monday with a TV ad campaign fronted by the actress Fay Ripley, best known for her role in the television series Cold Feet. The grocer operates Clubcard in four countries globally.