UK's Sainsbury's cuts Nectar reward points for shoppers

LONDON, Oct 14 (Reuters) - British supermarket Sainsbury's is to halve the number of Nectar reward points it gives holders of its loyalty card, the latest sign that an escalating price war is forcing grocers to look for cost savings.

Sainsbury's, which is battling with Wal-Mart Stores' Asda to be Britain's No. 2 grocer behind Tesco (Xetra: 852647 - news) , told customers on Tuesday that from April 11 next year it will award one Nectar point for every pound spent compared with two currently.

Nectar card holders can use points to pay for their shopping with 500 points worth 2.50 pounds ($3.98).

Sainsbury's is also scrapping the award of one Nectar point each time a customer uses their own bag, although shoppers will still earn one Nectar point per litre of fuel purchased.

Last month Sainsbury's said it will only benchmark prices with Asda, no longer including Tesco in its "Brand Match" price comparison scheme - a move that will safe it administration costs.

Like its big four rivals, which also includes No. 4 Morrisons, Sainsbury's has been losing market share to discounters Aldi and Lidl.

All of the big four have responded by cutting prices.

Earlier this month Sainsbury's posted a third straight fall in quarterly like-for-like sales, cut its annual sales forecast and said it would review its dividend as part of a wider examination of the business, adding to the turmoil in a sector reeling from an accounting scandal at Tesco .

A spokeswoman for Sainsbury's said that despite the changes, there would be benefits to shoppers, including more "high value bonus events" and more categories added to its Christmas "Double Up" event.

Shares (Berlin: DI6.BE - news) in Sainsbury's were down 1.4 percent at 226 pence at 1300 GMT. (1 US dollar = 0.6277 British pound) (Reporting by James Davey, editing by Louise Heavens)