Are you supermarket loyal?

This post is from 2015!

Supermarkets falling profits

There has been much discussion by retail analysts as to the reasons for profits of the supermarkets falling. Is it because the supermarkets have diversified too much and have forgotten what made them successful? Which companies have the best sited stores? It is probably a combination of many things. The public using more convenience stores and dropping the weekly shop and the irony of the likes of Tesco and Sainsburys developing these smaller stores in the first place?  The price wars between the big four and Lidl/Aldi. Are people doing a weekly shop for non-perishables and buying what they want to eat that evening on the way home from work?  Who understands the price matching thing anyway? Is it a Tesco finest pie versus a Sainsbury’s taste the difference pie? Is it Sainsbury’s taste the difference tomato versus Asda’s tomato? Then you have the all the confusing prices that annoy everyone. Which? has a petition you can sign regarding that one!

Loyalty cards

From 11th April Sainsbury’s reduce their loyalty points on their Nectar card. Sainsbury’s nectar turns sour. This move from Sainsburys may save them money in the short term but in the long term customers are less loyal than they ever were and we often know that companies frequently reward new customers and not existing customers and this is a very good example of that. All the loyalty cards have their confusions don’t they? X for purchases in stores, y on the credit card, z in other stores and they should be simplified!

At Christmas Sainsbury’s provided a “double up points” scheme that was limited to £20 per department and many staff didn’t even know what was in and what was out of the offer. (I know this because I experienced it and I vaguely remember sending them my opinions on their Christmas offer. £20 limit on toys for a family of 4 isn’t very helpful either. This sort of thing annoys customers greatly and for Sainsbury’s to increase their profits they need to be mindful of making thing more complicated for customers if they want to develop loyalty. In contrast, Tesco has the most developed reward scheme with the most frequent doubling up of value and range of items to spend points on. It also seems to have improved its voucher scheme having simplified the doubling up process so that you can spend across departments with no limit. They had to do something after I took Tesco to court over their clubcard fiasco perhaps?!

Morrisons has only just started a loyalty card. Late to the table with that one. I discussed their woes with Adam Parsons on wake Up To Money on Radio 5

Radio 5live Breakfast Helen Dewdney talking supermarket tactics to make you buy more

Simple answer for all supermarkets?

Ask the customer what they want and give it to them. Develop a decent loyalty scheme that rewards customers, don’t  take away from exiting loyalty schemes, improve them. Surely that is obvious? Perhaps not to some CEOs. Customers have been saying for years just reduce the prices, stop all the annoying vouchers that customers have to fill their purses/wallets with, stop all the bogoffs and offers just reduce the prices, permanently. Despite the fact that this is a well-known hate of customers the supermarkets still continue the practice. Supermarkets need to set up a thorough programme of consultation running various meaningful projects not just ask for feedback from just existing customers. Perhaps it about time that supermarkets took on an “Every listen helps” slogan.

Are you loyal to a supermarket? Why? What should they do to improve your loyalty or get it in the first place? Is it just price or do they need to do more? What do you think of the price matching, deals, etc etc?!

12/03/2015 Morrisons figures

Sainsbury’s nectar turns sour

Supermarket’s forthcoming trading figures may reflect disillusioned customers

Sainsbury's nectar turns sourFrom 11th April Sainsbury’s reduce their loyalty points on their Nectar card. This move from Sainsburys may save them money in the short term but in the long term it could hurt the supermarket hugely.

When Sainsburys announced this change last year it said that it would be making better and bigger offers, with more included in their double-up voucher scheme at Christmas. However, in reality the “double up points” scheme that was limited to £20 per department and many staff didn’t even know what was in and what was out of the offer with confusion around Christmas gifts and food. £20 limit on toys for a family of 4 isn’t very helpful either. I know I just kept going back and doubling up for alcohol! Very inconvenient for customers.

This sort of thing, reducing offers and making it complicated annoys customers greatly and for Sainsbury’s to increase their profits they need to be mindful of making things more difficult for customers if they want to develop loyalty. In glaring contrast, Tesco has the more developed reward scheme, with the most frequent doubling-up of value and range of items to spend points on. It also improved its voucher scheme for Christmas, having simplified the doubling-up process so customers could spend across departments with no limit. As you know, I have had several run ins with Tesco and people often ask why I still shop there. The loyalty scheme is right up there, I’ve saved hundreds of pounds using it making it much cheaper than other supermarkets overall.

In a benchmarking survey of 1,000 UK consumers, the marketing and data specialists GI Insight, found that companies in the supermarket sector are by far the most popular loyalty scheme providers, as more than three quarters of respondents are members of at least one supermarket loyalty programme. The supermarkets, in terms of the percentage of consumers who are members, remain active and recognise the brand’s ability to effectively analyse their data to deliver relevant and useful offers.

Supermarkets fighting the price wars and offering price matching need to find other ways of retaining and attracting customers. I think Mike Coupe is at risk of making the same mistakes as Clarke. Never mind all the analysis of this, that and the other, Tesco’s downturn in fortunes boiled down to one simple thing, Clarke didn’t listen to customers and that filtered through the company. With only an eye on growth and making more money he didn’t care about exiting customers and they left as a result.

Loyalty must work both ways

Customers flocked to social media when Sainsburys announced that they would be reducing the value of nectar points, making their feelings clear, with many customers saying that they would be leaving the supermarket. It will be interesting to see what the following quarter is like too, when the cut in loyalty points kicks in and if Coupe continues not to listen to customers. Perhaps it about time that supermarkets took on an ‘Every listen helps’ slogan”!

Should you wish to contact Sainsbury’s CEO, do so here.

What are your thoughts of the loyalty schemes?