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Call for Competition Watchdog to Investigate Supermarkets’ Loyalty Card Schemes

An investigation by consumer watchdog Which? has raised concerns surrounding the pricing on so-called member-only pricing at Tesco and Sainsbury’s stores.

The UK’s competition watchdog has been urged to investigate two big retailers over their so-called customer loyalty card schemes.

An investigation by Which? uncovered that Tesco and Sainsbury’s have been increasing prices on some products, before later offering them to loyalty card holders at a lower price.

The consumer group analysed 141 Clubcard and Nectar card prices, tracking them back six months to find that around a third of the member-only promotions were at their so-called “regular” price for less than 50 percent of the six-month period.

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Both Sainsbury’s and Tesco said Which? had failed to take inflation into account when analysing prices, and stressed that they adhered to Trading Standards rules on promotions.

Which? identified three recurring problems around the “regular” price quoted for products on offer to customers with loyalty cards—that they were far more expensive than at other supermarkets, that they had been changed right before the promotion, or were only available for a short amount of time.

The findings are part of the consumer watchdog’s investigation into the increasingly widespread use of loyalty card schemes across supermarkets, which only allows those customers who are signed up access to the lower tier of pricing.

Price Hiking

Among the deals of concern to Which? was a jar of Nescafé Gold Blend Instant Coffee (200g) advertised at Sainsbury’s for £6 with a Nectar card—a saving of £2.10 on the “regular” price of £8.10.

However the regular price had also been £6 at Sainsbury’s until it went up to £8.10 just two days before the Nectar price launched.

Which? also found the regular Sainsbury’s price was significantly higher than at other supermarkets, such as Asda, where the same jar cost £7, or at Morrisons, Ocado and Waitrose where it was available for £6. It was even cheaper at Tesco (£5.99) and at Lidl (5.49).

In another example, Which? found Heinz Salad Cream (605g) at Tesco with a Clubcard price of £3.50 and a regular price of £3.90, even though its regular price had been £2.99 for several weeks before it was increased to £3.90—just 22 days before the Clubcard promotion.

Which? found the condiment has been its regular price for just 25 days out of 183, or 14 percent of the previous six months.

Overall, Which? found a third of the products at Sainsbury’s—34 percent of 71 products—were the “regular” price less than half the time over the previous six months. At Tesco, the same was true for 24 percent of the 70 items analysed.

As well as being clear and not making unfair price comparisons, current regulator guidance dictates that it is important that if a proposed pricing practice explicitly or by implication indicates a saving against another price, the quoted saving is genuine and can be trusted by shoppers.

Which? said it had shared its findings with the Competition and Markets Authority (CMA) and asked them to look at whether supermarkets could be hiking their “regular” prices to make loyalty scheme customers feel they are getting a discount.

A man shops in a Sainsburys supermarket in Tunbridge Wells, United Kingdom, on on Jan. 12, 2021. (Chris J Ratcliffe/Getty Images)
A man shops in a Sainsburys supermarket in Tunbridge Wells, United Kingdom, on on Jan. 12, 2021. (Chris J Ratcliffe/Getty Images)


Responding to the Which? findings, a Sainsbury’s spokeswoman said: “Nectar Prices offer our customers the opportunity to make genuine savings across 5,000 products. Which? fails to recognise that base prices have been increasing throughout the year due to inflation.

“Our promotional rules around Nectar Prices are informed by the guidance from Trading Standards.”

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