Yahoo Finance Thousands locked out of supermarket loyalty discounts
Supermarkets and high street stores risk penalising older and vulnerable shoppers by reserving their best deals for customers who use smartphone apps, experts have warned.
Major retailers are increasingly encouraging shoppers to download apps to access special deals and lower prices, which are only available to members of their loyalty schemes.
Four out of five shoppers are a member of at least one loyalty card scheme, according to retail analyst Mintel. But with many schemes becoming digital-only, experts are warning those who choose not to – or cannot – use a smartphone could be paying “disproportionately more” for their weekly shop.
A third of over-75s do not use the internet – approximately 1.6 million people in the UK – according to the charity Age UK. More than two-thirds cannot use it safely because, for example, they struggle with passwords and understanding how security checks work.
“Increasingly, offers are being pushed purely in the digital space,” said Caroline Parkes, chief strategy officer at global marketing agency RAPP.
“With such high levels of over-75s not using the internet, let alone having a smartphone or being able to understand how apps work, you’ve got a huge proportion of what can be a very vulnerable part of society who cannot get access to [certain deals].”
At Asda, only customers using a dedicated app can access the Asda Rewards scheme, which pays customers back 10pc of the retail price when they buy certain promoted items.
Budget supermarket Lidl’s app, Lidl Plus, rewards users with money-off coupons depending on how much they spend in store, as well as entry to competitions for shopping vouchers. It is only available to customers with a smartphone.
Morrisons replaced its physical Morrisons More loyalty cards with an app in 2021 but it has since U-turned slightly. After it updated the scheme last year to bring in members-only prices, customers can now apply for a physical card but it is not available to pick up in stores. Applications must instead be done via the website or app, by calling a helpline, or asking a member of store staff. Customers must then wait up to 14 days for the card to arrive.
And while the Tesco Clubcard can be used as either a physical card or app, the retailer is increasingly pushing customers towards the digital version. The grocer’s Easter competition, for example, offers shoppers the chance to win one of 50 £200 vouchers – but only if they scan a digital Clubcard at the till.
As well as older shoppers, anyone unable to afford a smartphone or who chooses not to use one could be at risk of being excluded.
Dan Wilson, vice-president of supply chain consultancy firm Proxima, said retailers were eager for customers to use apps because of the amount of data that can be collected.
“Data is incredibly valuable,” he told The Telegraph. “It tells supermarkets what you are buying, which allows retailers to provide customers with tailored offers.
“But a lot of that data is also taken down the supply chain, as major brands will pay big sums for it.”
Several supermarkets, including Tesco and Sainsbury’s, now own huge digital media companies.
They use data from loyalty scheme members for in-store advertising, such as promotions on posters, trolleys and shelves, as well as targeted adverts via apps, websites and email marketing.
On top of this, they can also sell data on customers’ shopping trends to brands, which view such information as “gold dust”, Wilson said.
Unlike physical loyalty cards, apps also allow retailers to track where adverts and promotions have worked. “They can see if the customer saw an offer and then acted on it and bought the product – apps help them close the loop,” he said.
Historically, customers have been happy to sign up to loyalty schemes and give away their data in return for rewards. But there are concerns about the shift to both app-based schemes and member-only prices, where goods are sold in store and online for a lower price to shoppers signed up to a loyalty scheme.
Tesco introduced Clubcard prices in 2019, while Morrisons, Boots, Co-Op and Sainsbury’s all introduced special loyalty card prices last year.
Iceland is rolling out its Bonus prices scheme, while member-only price schemes exist at fashion chain H&M, stationery chain Ryman, hardware retailer Robert Dyas, and furniture store IKEA.
For now, most chains allow shoppers to use a physical or digital loyalty card to access these discounts.
Pensioners and teenagers pay the price
In January, the Competitions and Markets Authority launched an investigation into loyalty schemes, looking particularly at whether customers felt forced to sign up to loyalty cards to avoid paying higher prices, and whether the system risked excluding any groups.
For example, younger shoppers could end up paying more as many loyalty schemes, including Tesco’s Clubcard, are only open to over-18s.
The investigation followed a number of reports into unfair pricing, including an investigation by consumer group Which? last year which found what it described as “potential dodgy tactics” at Sainsbury’s and Tesco.
It tracked product prices for six months and found the retailers appeared to inflate the prices of some items before offering loyalty card “discounts”.
In one example it reported, a 200g jar of Nescafe Gold Blend had been on sale at Sainsbury’s for £6, until the price was raised to £8.10 two days before the supermarket introduced a Nectar Price deal of £6. Customers not signed up to the scheme had to pay the higher price.
Parkes said older people were less likely to be physically able to use different supermarkets if they were unwilling or unable to sign up to a loyalty scheme.
“If your only choice is to go to Sainsbury’s and you don’t have a Nectar card, then you’re paying a disproportionately large amount for your shopping,” she added.
Graham Wynn, of the British Retail Consortium, which represents retailers, said: “Retailers are committed to providing value to their customers, and loyalty schemes, which are open to all, are one of many ways that retailers offer their customers genuine bargains on a daily basis.”
Asda, Tesco, Morrisons, Lidl and Sainsbury’s declined to comment.
A Boots spokesman said: “The Boots Advantage Card loyalty scheme is open to all, with customers able to choose the sign-up and card option that suits them best e.g. physical or digital.
“If a customer prefers not to sign up online or via the Boots app, a team member in any store can sign them up and provide them with a physical card or they can call our customer services team.
“In addition to price advantage which offers exclusive prices to Advantage Card members, Boots offers an extensive range of promotions that are available for all, helping customers to make savings on their health and beauty needs.”
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