image source, Getty Images
- Author, Jennifer Meierhans
- The role, Business reporter
New supermarket “challenges” that reward shoppers with extra loyalty points for buying more could lead to overspending, consumer groups have warned.
The UK’s four biggest supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – are now offering members of their loyalty schemes bonus points if they hit spending targets.
All the supermarkets say their schemes offer customers better value and more personalized savings.
But consumer group Which? and debt charity StepChange has warned that setting shopping challenges could encourage people to spend more than they can afford.
These challenges are the latest development in increasingly sophisticated supermarket loyalty card schemes.
At the same time, food prices rose at an annual rate of nearly 20% last year – the highest since the 1970s – and are only now returning to more “normal” rates.
“Competition between supermarkets is fierce at the moment, with everyone shouting about the number of price cuts they’ve made,” said Ele Clark, retail editor at Which?. “But the fact remains that overall food is still far more expensive than it was a few years ago.”
Ged Futter is a former buyer for Asda and now advises suppliers on how to negotiate with retailers. He said personalized pricing and challenges were simply a way for supermarkets to compete for customers.
“They’ll look at the products you buy during the month and then give you offers to make sure you buy that product from them again,” he said.
Challenges vary between supermarkets and include shopping more often or reaching target spending on certain products within a given time frame.
‘Like a game’
Jo Rourke, a single mother of three from Manchester, told the BBC that customers “need to tread carefully” when it comes to loyalty card challenges or missions.
“The terminology of ‘challenge’ could make it seem like a game, and if you’re someone who’s drawn into that sort of thing, it could be quite dangerous,” she said.
Ms Rourke – who shares tips on how to save money at the food shop on her social media accounts @thismumcooks – said she she does not think that the challenges in the supermarket 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, according to research firm Kantar.
- Find out the prices: Know the price of items you buy regularly so you can spot what’s a good deal and what’s not
- Compare the price for 100g: Look on the shelves for similar items as loyalty prices may not be the cheapest option.
- Set a budget and stick to it: Often supermarket vouchers or challenges will require you to spend more so don’t be tempted to overdo it.
- Pile up: If you want to use the voucher to pay out money, buy in bulk foods such as pasta, rice or canned food that have a long shelf life
- Use the technique: Use independent supermarket comparison apps to save your favorite items and get alerts when their price drops
Investigation
Mrs. Clarke in Which? he told the BBC: “With many families barely making ends meet, it is important that supermarkets do not overdo these challenges and encourage customers to spend beyond their means to get the rewards.”
It examines whether loyalty pricing is a genuine promotion or could mislead customers, whether it puts any group at a disadvantage and affects buying habits, and how supermarkets compete with each other. An update of 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 people could spend more than they initially planned or can afford if spending is encouraged.” He urged anyone with financial difficulties to contact the charity.
The BBC asked Tesco, Sainsbury’s, Asda and Morrisons for their response to concerns that their loyalty challenges could encourage overspending.
A Tesco spokesman said its challenges were “all about rewarding customers for buying the products they buy regularly”.
Sainsbury’s said bonus points were “issued based on the number of shops completed by customers, with a minimum qualifying spend of £1 per shop”.
Asda and Morrisons did not respond.