Clubcard Prices from Tesco
16 September 2020
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Clubcard Prices
So, with loyalty pricing being an increasing trend around UK retail, with tailored pricing for card holders and indeed, former years seeing customers at Waitrose being able to select the products which they received a discount on. Which was a remarkable piece of work for customers, but you'd think, almost impossible to forecast demand for, leading to availability challenges and disappointed customers.
More recently - 2019 saw Sainsbury's run a campaign which includes discounts on products for Nectar card holders and often, loyalty customers benefit from input around extra points mailed directly to their inboxes, or their home addresses.
Tesco ran their Clubcard deals for holders last year as part of their 100 years of great value campaign, these included strong discounts on non food and electrical items for anyone with a Clubcard, upon scanning it at the checkout, resulted in the discount being applied.
However, Tesco did give hints that as part of their Aldi price match campaign and continued aggressiveness on price that they'd look to bring Clubcard deals across food, making it a near 'no brainer' to both have a clubcard and indeed, use it when shopping at Tesco. A real 'loyalty' scheme and indeed, there are obvious benefits to doing this, around loyalty (being able to use the Clubcard in Tesco stores = driving trade) and encouraging customers to scan their card, which you obviously do, given the discounts are only triggered by doing so.
Once done, then new holders are captured and their shopping habits are tracked and built in to the database, equally further shoppers are able to be tracked, targeted and their data is added to the database, identifying customer segments, new parents, those with allergies and crucially, all of these customers, having given their consent, can be targeted at key trading periods with vouchers and other incentives. Directly.
The 'swipe rate' is the key metric in which loyalty cards are targeted and their effectiveness is therefore judged. A higher number of 'swipes' means a. better, richer dataset and naturally, the savings are triggered so there's a real incentive for customers to swipe their card which drives the number upwards. So the loop is closed and Tesco can understand how effective their work is around value tier products and wider value perception.
The key element in-store is to get customers to sign up for a clubcard if they don't have one. Signage is plentiful around the store, identifying the QR code for customers to use in order to access Clubcard and sign up for a card, whilst in store.
Essentially, the deals are only on Frozen Foods initially and to access any of the special offers (not all, various deals are still active) but the headline deals, on the ends, are only available to Clubcard holders and the prices are strong.
Numerous products are on half price with the clubcard and these are 'no brainers' in terms of accessing the card and using it, if you were not a holder previously. Interestingly, there may well be some form of commercial monies flowing from suppliers, keen to understand their customer profiles as well, however special offers are risky because there is a chance that customers are not brand loyal and just buying because of the promotion.
The key is then targeting customers with vouchers, or similar incentives, to encourage them to buy the product when the price is higher.
So for Frozen Foods, Clubcard is the key to the greatest value on a special offer basis at least. However for the wider store, low prices remain key and there is a furious price matching between Tesco and Aldi each week, with brands included based on their appearance in the special buys area.
With further categories rumoured to be moving to Clubcard holders only in future weeks, it's unlikely that the entire promotional programme could be available to Clubcard holders only, however, it's not beyond the realms of possibility either.
The fact this is a measured approach, rather than a desperate attempt to grab sales as it would have been under Philip Clarke, who perhaps would have focused on the ability to deliver the deals and technology, rather than whether customers wanted the deals in this way.
Clubcard prices being a strategic move alongside a wider focus on lower prices is testament to the Dave Lewis reign at Tesco, which, after a pandemic inspired extension, comes to an end next month.
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From the Grocery Insight newsletter archive, first sent to subscribers on 16 September 2020. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.