Issue 487 - Nectar prices
5 May 2023
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Retail by Email - Issue 487 - Nectar.
Loyalty remains a real emerging trend in terms of member specific pricing, we have been here before. Waitrose ran loyalty specific pricing some years back (even allowing customers to pick their offers!)
We have isolated examples of loyalty only pricing elsewhere. But Tesco landing their entire promotional package, bar food to go meal deal (initially) has kick started work elsewhere in the market too.
Asda of course have landed their loyalty scheme where customers are able to build their “cashpot” with offers back loaded. So the customer gets the money back on their loyalty app, rather than benefitting from the saving up front.
Their prices are not fully loyalty based either, because there is a balance to be had, especially in the EDLP world. Between low prices at the point of the transaction and then the ability to “save” your savings for a later occasion (Christmas eg).
Sainsbury’s have made a lot of use of Nectar in recent years, of course aided by the fact that suppliers will pay big money. Aiming to target their customers / new customers with competitions and big prizes for purchasers.
Whether this erratic targeting actually works, or is proven to drive purchases remains to be seen. Certainly we know that the signage and presumed access to data is paid for and aids the commercial income budget….
But does it drive loyalty? In any way?
Whereas Nectar prices, landing recently in Sainsbury’s do feel more of a targeted approach and piggy backing on to the success Tesco have had. Naturally, participation (swipe rate) of a card is the golden metric.
The more users who participate and swipe their card/app = more meaningful data with the all important trends to spot. Be it a growing family, habitual allergy sufferers buying the same products each week, or affluent customers.
All the data enables patterns to emerge, although a dataset is only as good as it’s breadth. A too narrow dataset is worse than useless for making decisions around ranging and commercialities.
Tesco have increased their engagement for Clubcard customers by switching to a pure loyalty based price position. As we know, you have to be mad not to have a Clubcard.
It gives access to all of the special offers in store, plus the points you gather on the way too.
Given Sainsbury’s have imitated a lot of the Tesco strategy in recent years, including value brand (rebrand). The Aldi price match service too, it’s of little surprise that they’ve started some loyalty only pricing work of their own.
The campaign which started a few weeks ago is strongly represented in store, leading brands have got involved with branded shippers and other signage.
Their main event space was given over to the launch alongside strong signage across the store on eligible products.
For now. it’s part of their offering so not exclusively loyalty pricing, but make no mistake, this is likely to grow and grow.
It’s a strong piece of work and requites less bravery, given what Tesco have achieved with Clubcard prices.
However it does require a critical mass, Sainsbury’s are getting there. It’s likely to be lucrative because you are offering suppliers a chance to access customers who will bring data via their loyalty cards also.
Morrisons are trying to kick start their own loyalty offering with a rebrand too. But going fully exclusive via loyalty pricing has stuttered because the user base has to be significant.
Some of their deals are available to loyalty customers.
However Morrison have preferred to add a further discount (sometimes an extra 50p) on a leading deal for loyalty customers.
More work to do here, but a trend is definitely emerging, with retailers wanting to offer more exclusive prices to their loyalty card holders..
Examples of the Morrisons “My Morrisons” scheme which is set to change back to customer gaining points on fuel and shopping, then receiving a £5 voucher.
Loyalty prices remain an important part of the jigsaw but it’s difficult when sales are flat, getting customers in the door is a priority.
Getting them to use a loyalty card when they’re not regularly shopping with you is a real challenge.
With some deals being questionable, is it worth signing up to the scheme (if you are not already) to save an extra 25p?
More to come on loyalty, the retailers will be looking to make good use of the data and enhance their targeting of customers.
Especially those who are spending less in store and disappearing to Aldi, or Lidl.
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From the Grocery Insight newsletter archive, first sent to subscribers on 5 May 2023. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.