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A year-long probe into UK supermarkets’ pricing practices has found “very little” evidence that shoppers are being treated unfairly with loyalty programmes such as the Tesco Clubcard scheme and Sainsbury’s Nectar points.
The Competition and Markets Authority (CMA) probe, which has been ongoing since November last year, investigated whether supermarket loyalty schemes cause inflation by faking the savings consumers hope to achieve when using the rewards programmes.
However, its review found that shoppers who are members of a loyalty scheme—97 per cent of customers in total—can “almost always make a genuine saving on the usual price by buying loyalty-priced products.”
“Having analysed around 50,000 grocery products on a loyalty price promotion, the CMA found very little evidence of supermarkets inflating their ‘usual’ prices to make loyalty promotions seem like a better deal”, the watchdog said.
It found the average savings on products with loyalty pricing on schemes such as the Tesco Clubcard ranged from 17 per cent to 25 per cent across the five supermarkets examined.
In addition, the CMA found that shoppers who do not sign up to a loyalty scheme membership generally pay the same price during the loyalty price promotion as they do in the weeks both before and after loyalty price promotions, which should “give shoppers confidence that they are not being treated unfairly”, the body said.
However, the watchdog added that it found several loyalty-priced products significantly more expensive than the lowest price available at other supermarkets, so “there is value in shopping around.”
The CMA said 61 of the 429 products with a loyalty price it examined were available at a lower price at other supermarkets.
The investigation is part of the watchdog’s latest attempts to investigate and improve fair deals amid the cost of living crisis.
It was launched in light of a two-year CMA investigation that found that three-quarters of branded suppliers in products such as baby formula, baked beans, mayonnaise, and pet food hiked their prices faster than their costs have gone up, contributing to higher food price inflation by increasing unit profitability.
Sue Davies, Which? Head of food policy, said: “Two-tier loyalty pricing has become a common practice across retailers. It’s therefore reassuring that the CMA has found that most of the prices it looked at across supermarkets offered genuine savings against the usual price. However, it stresses that it is worth shopping around as they aren’t always the cheapest option.
“Which? has also looked at prices for thousands of products and repeatedly found examples of loyalty price offers that aren’t as good as they seem. We have also raised concerns that millions of consumers are being excluded from accessing lower prices due to loyalty scheme restrictions. It’s therefore essential that supermarkets act on the CMA’s recommendation and do more to enable people to join their schemes.
“The CMA should continue to monitor loyalty pricing practices across key consumer sectors beyond supermarkets and be ready to use its new powers to take action against retailers that don’t comply with consumer law.”