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?

Government hushes up critical consumer and trading standards reports

The Department for Business, Innovation and Skills (BIS) has recently released two reports: “Consumer Empowerment Survey Report” and “The Impact of Local Authority Trading Standards in Challenging Times“. Neither report was given any press announcement or further comment from BIS ministers or other staff.

Consumer Empowerment Survey Report

This 95 page research study, carried out by GfK NOP Social Research, was designed to gain a better understanding of the attitudes of groups of consumers, and to build a stronger picture about their characteristics and engagement levels: particularly those consumers in vulnerable situations and/or on low incomes.

This report was finalised on the 15th March but not released by government until the 18th March. This was Budget Day. The report was given no press release or other coverage.

The report states that “…the market also requires empowered, active and informed consumers in order to flourish. Only then will the full benefits of competition – which include lower prices, greater innovation, efficiency and growth – be unlocked.

There is strong evidence that many consumers do not engage fully in their transactions;….. Whatever the barrier, it is the least engaged groups of consumers that are likely to miss out on the best deals, overpay for basic services, or even get ripped off”.

The report found that 57% of those surveyed said they felt very confident about making complaints post-purchase, but that only 32% were confident that the law would protect them.

A recent survey showed that fewer than 45% of people in the UK use their consumer rights and that only 7% said they know their legal rights well and use them regularly.

I’m not surprised by these findings of course, People frequently ask me about their legal rights, sometimes having heard of the Sale and Supply of Goods Act and may even know that items have to be of satisfactory quality, fit for purpose and last a reasonable length of time. But they have no idea how long “a reasonable length of time” is, or if they are entitled to a full refund or just a repair for example.

All these surveys and evidence show that a minority of the public know and assert their legal rights. People also cite time and effort as factors too. It takes more time and effort than it should, often because companies fob off the customer, so even the customers who have a passing knowledge of the Law don’t get the redress they are legally owed. Evidenced last week, when someone on Twitter was having trouble with a certain electrical goods retailer and their line on refund, repairs and replacement policy. When I joined in the conversation to help, the retailer blocked me! But Go to AO.com that’s what I say. Price match and if something goes wrong they deal with it properly and don’t try and fob you off. High praise indeed from me, yes!

The Impact of Local Authority Trading Standards in Challenging Times

The second report, “The Impact of Local Authority Trading Standards in Challenging Times” is dated February 2015, is 145 pages long has 6 recommendations and was released on the 20th March, again with little to no coverage.

The report explored the impact of budget cuts to local trading standards and tested the efficiency of services across the country. It said that changes had led to “a relatively weak, and probably diminishing, profile of trading standards, both within the public eye and within the local authority context.”

The loss of skills, knowledge expertise and the diminishing of these services in protecting consumers can only mean one thing. Increase in bad practice and decrease in protection for the consumer. The report even talks about staff who, in their own time carry out investigations because they feel it so important. Yet again the government relying on people’s good well to provide good services because decent people feel they have to do the extra. If they were treated better perhaps they would do more because they wanted rather than felt they had to. Bet that sounds familiar to NHS staff.

Timings 

It is incredible that the government commissions, at great expense these two reports and then appears to ignore them. One shows how little people know about their consumer rights and the other discusses the impact of cuts in Trading Standards, the reduction in inspections and support for the consumer with increasing bad practices in companies as Trading Standards struggles to undertake the necessary proactive work.