image source, Getty Images
- author, Jennifer Meyerhans
- role Business reporter
New supermarket “challenges” which reward shoppers with extra loyalty points for buying more could lead to overspending, consumer groups have warned.
Four of the UK’s biggest supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – now offer 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 user group Which? and debt charity StepChange has warned that setting shopping challenges can 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 almost 20% last year – the highest since 1970 – and are only now returning to “more normal” rates.
“Competition between supermarkets is fierce at the moment, with all of them shouting about the number of price cuts they’ve dropped,” said Elle Clarke, 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 Asda buyer 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 again with them,” he said.
Challenges vary between supermarkets and include shopping more often or reaching a spending target for specific products within a certain time period.
“Like a Game”
Jo Rourke, a single mum-of-three from Manchester, told the BBC that shoppers “need to tread carefully” when it comes to loyalty card challenges or missions.
“The terminology of ‘challenges’ can make it feel like a game, and if you’re someone who gets into that kind of thing, it can be quite dangerous,” she said.
Ms Rourke – who shares tips on how to save money from the food shop on her social media accounts @thismumcooks – said she did I don’t think supermarket challenges would encourage her to shop more than one store.
“I don’t think it’s worth being a loyal customer. I think it’s worth shopping all the supermarkets in your area,” she said.
The average person has loyalty cards for three supermarkets, according to research firm Kantar.
- Learn the prices: Know the price of items you buy regularly so you can determine what’s a good deal and what’s not
- Compare price for 100g: Look on the shelf for similar items as loyalty pricing 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 overspend
- I stock: If you still want to take advantage of a cashback voucher, then buy bulk staples such as pasta, rice or canned goods 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? told the BBC: “With many families struggling to make ends meet, it’s important that supermarkets don’t overplay these challenges and encourage shoppers to spend beyond their means to access rewards.”
It examines whether loyalty pricing is a genuine promotion or could mislead shoppers, whether it puts groups at a disadvantage and whether it affects shopping habits and how supermarkets compete with each other. An update on the findings is expected in July.
Simon Trevetick, head of communications at StepChange, said: “While retailer loyalty schemes 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 to afford.” He urged anyone experiencing financial difficulties to contact the charity.
The BBC asked Tesco, Sainsbury’s, Asda and Morrisons about their response to concerns that their loyalty challenges could encourage overspending.
A Tesco spokesman said the 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 stores customers completed, with a minimum qualifying spend of £1 per store”.
Asda and Morrisons did not respond.