image source, Getty Images
- Author, Jennifer Meierhans
- Role, Business reporter
Consumer groups have warned that new supermarket ‘challenges’ which reward shoppers with extra loyalty points for buying more could lead to overspending.
Four of Britain’s biggest supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – are now offering members of their loyalty programs bonus points if they hit spending targets.
All the supermarkets claim their systems offer customers better value and more personalized savings.
But the consumer group Which? and debt charity StepChange warned that setting shopping challenges could encourage people to spend more than they can afford.
These challenges are the latest development in supermarket loyalty card schemes which are becoming increasingly sophisticated.
Meanwhile, food prices rose by nearly 20% annually last year – the most since the 1970s – and are only now returning to more “normal” rates.
“Competition between supermarkets is fierce at the moment and everyone is shouting about the number of price cuts,” said Ele Clark, retail editor at Which?. “But the fact remains that overall, food is still much more expensive than it was a few years ago.”
Ged Futter is a former buyer at Asda and now advises suppliers on how to negotiate with retailers. He said personalized prizes and challenges were simply a way for supermarkets to compete for customers.
“They look at the products you buy throughout the month and then give you offers to make sure you buy that product from them again,” he said.
Challenges vary from supermarket to supermarket and include shopping more often or reaching a target spend on specific products within a set time frame.
‘Like a Game’
Jo Rourke, a single mum-of-three from Manchester, told BBC Shoppers that she “needs to tread carefully” when it comes to loyalty card challenges or missions.
“The terminology of ‘challenge’ could feel like a game, and if you’re someone who gets drawn into that kind of thing, it can be quite dangerous,” she said.
Ms Rourke – who shares tips on how to save money at the grocery store on her social media accounts @thismumcooks – said yes I don’t think supermarket prompts would encourage her to shop more in one store.
“I don’t think it pays to be a loyal customer. I think it pays to shop at all the supermarkets in your area,” she said.
The average person has loyalty cards for three supermarkets, data from research firm Kantar suggests.
- Learn the prices: Know the price of items you buy regularly so you can see what’s a good deal and what’s not
- Compare the price per 100g: Look along the rack for similar items, as loyalty prices may not be the cheapest option.
- Set a budget and stick to it: Vouchers or supermarket incentives often require you to spend more, so don’t be tempted to overspend
- Supplies: If you want to use a discount voucher, buy in bulk such as pasta, rice or canned goods that have a long shelf life.
- Use the technique: Use independent supermarket comparison apps to save your favorites and get alerts when prices drop
Investigation
Mrs. Clarke at Which? told the BBC: “With many families struggling to make ends meet, it is important that supermarkets do not overdo these challenges and encourage customers to spend beyond their means to access rewards.”
It investigates whether loyalty prices are genuine promotions or could mislead customers, whether they disadvantage certain groups and whether they influence shopping patterns and how supermarkets compete with each other. An update on its findings is expected in July.
Simon Trevethick, head of communications at StepChange, said: “While retailer loyalty programs can provide useful discounts for customers, there is a risk that if spending is incentivized, people may end up spending more than they originally planned or could afford.” He urged anyone who have financial difficulties to contact the charity.
The BBC asked Tesco, Sainsbury’s, Asda and Morrisons for their response to concerns that their loyalty appeals could encourage overspending.
A Tesco spokesman said its problems were “rewarding customers for buying products they buy regularly”.
Sainsbury’s said bonus points were “issued based on the number of shops customers completed, with a minimum qualifying spend of £1 per shop”.
Asda and Morrisons did not respond.