Yahoo Finance Tesco and Sainsbury's using 'dodgy tactics' on promotions, says Which?
Competition watchdog urged to investigate misleading loyalty card pricing
Supermarket giants Tesco and Sainsbury’s are using ‘dodgy tactics’ to give loyalty member customers impressions of big savings than they are really getting, according to Which?.
The consumer champion launched an investigation into two of UK’s biggest supermarkets, Tesco and Sainsbury’s to find out whether the popular supermarkets were hiking their regular prices to give the impression that customers were getting a discount.
Which? found that around a third (29%) of the member-only promotions for the Tesco’s Clubcard and Sainsbury’s Nectar card were at regular prices just days prior to the promotion.
Both loyalty cards give members a discount off regular prices, but the research suggests that the growing use of promotions attached to the cards raised concerns among shoppers.
Up to a third of loyalty offers at Tesco and Sainsbury’s are “not all they’re cracked up to be”, Which? warned, as it urged the Competition and Markets Authority (CMA) to investigate supermarket dual pricing.
Which? identified three key findings and shared them with the CMA.
It included regular prices that had been changed right before the loyalty card promotion, regular prices that were far more expensive than at other supermarkets and regular prices that were only available for a very short amount of time.
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141 Clubcard and Nectar promotion prices were analysed. Among those, Which? found a third of the products at Sainsburys (34%) of 71 products were the ‘regular’ price and 24% of 70 products at Tesco, just a few days before getting discounted.
The analysis found that an average everyday grocery basket using a loyalty card had a saving of 6.4% at Tesco and 2% at Sainsbury’s.
Among the potentially risky deals, Which?’s investigation revealed Sainsbury’s advertised a jar of Nescafé Gold Blend Instant Coffee (200g) for £6 with a Nectar card – a saving of £2.10 on the ‘regular’ price of £8.10. But 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 much higher than at other supermarkets. At Asda, the same jar was £7, while at Morrisons, Ocado and Waitrose it was £6, £5.99 at Tesco and £5.49 at Lidl.
Similarly, at Tesco Which? found Heinz Salad Cream (605g) with a Clubcard price of £3.50 and a ‘regular’ price of £3.90 however its regular price had been £2.99 for several weeks before it was increased to £3.90 - just 22 days before the Clubcard promotion. It had been at its ‘regular’ price for only 25 days out of 183, over the period of 6 months.
One shopper told Which?: “I agree that these attract customers like me, but feel like they raise the prices anyway and then members' prices become the normal price it should be.”
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Supermarket regulator guidance obliges companies to indicate quoted prices genuinely that can be trusted by shoppers.
Sainsbury’s said that due to inflation, many products had increased in price over the past six months and Sainsbury’s own inflation rate had been behind many of its competitors.
It added: “We make every effort to be transparent about how customer data is used at Nectar. Customers can find more information on this in the privacy policy on our website.”
Tesco said all its Clubcard Price promotions followed strict rules, including looking at how they compared against prices at other supermarkets, to ensure they represented genuine value and savings. It said these rules had been endorsed by Tesco’s Trading Standards, Primary Authority.
The Which? investigation also found that not all customers are able to sign up to loyalty schemes in the first place.
Loyalty schemes often come with restrictions which are limited to those who meet a certain requirement in order to enjoy its benefits.
Age and address-based restrictions as well as digital requirements means some shoppers miss out on members discounts.
Those in vulnerable groups, such as young parents and carers, school children buying lunch and those in temporary accommodation could be excluded from benefiting from the lower prices offered to members. The current age requirements for a loyalty card is 18 and over.
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As a result, those groups may often end up paying inflated ‘regular prices’.
One shopper told Which?: “I don’t mind member-only pricing from a selfish point of view, but think it’s very discriminatory and morally questionable.”
Which? said that Tesco and Sainsbury’s are sometimes offering customers deals that do not necessarily constitute a genuine saving.
It urged the regulator to properly scrutinise companies who use pricing tactics which make loyalty discounts look more attractive.
“It’s not surprising that shoppers are questioning whether supermarket loyalty card prices are really a good deal, as our investigation shows that up to a third of loyalty offers at Tesco and Sainsbury’s are not all they're cracked up to be,” said Sue Davies, Which? head of food policy.
She said: “Which? is calling on supermarkets to make sure that their loyalty card prices don’t mislead and for the regulator to look more closely at this growing trend towards dual pricing. There is also the important issue of whether it is right for certain groups to be excluded from member-only schemes.”
The consumer champion called for changes to be made to the sector's ever-growing member-only pricing, its pricing practices and membership eligibility.
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