Tesco backtracks on cuts to clubcard rewards after customer backlash: But is it writing on the wall?
As soon as Tesco said it was cutting some of its Clubcard rewards, customers started venting their anger. “Kick people while they’re down,” said one. Another called it a “blow” after saving up the vouchers for two years. The supermarket has now backtracked and delayed the cut until the summer.
But experts believe the move is part of a wider trend, and said the days of shoppers using plastic loyalty cards and collecting supermarket reward vouchers are numbered.
“This concept of swiping a card at the till is dated. It’s not what attracts us to a supermarket,” says retail analyst Natalie Berg of Planet Retail. It is no coincidence that Aldi and Lidl, the UK’s two fastest-growing supermarket chains, do not have loyalty cards.
“Shoppers are no longer monogamous. The idea of being loyal to a particular supermarket is a thing of the past,” she says.
With the weekly, out-of-town shop in decline, and supermarkets facing intense pressure on prices and online deliveries, it is no surprise that loyalty cards are less of a priority, Ms Berg says.
However, the backlash over Tesco’s move showed shoppers still cared about loyalty rewards.
“It’s the final stages of loyalty cards, but not of loyalty schemes,” says Martin Lewis, founder of the Money Saving Expert website, who led the campaign against Tesco’s sudden Clubcard changes.
“The idea that it’s a piece of plastic, and that you get points back and vouchers, is going to go.”
He knows of shoppers that have keyrings containing more than 40 loyalty cards. Those will increasingly become a thing of the past as they are replaced with technology that still offers discounts, Mr Lewis says.
There is at least one smartphone app, Stocard, that lets users upload all their loyalty cards into one place.
And the salad chain, Vital Ingredient, dropped its customer card in favour of an app that enables payments and gives reward points.
As our shopping habits change, so too do our expectations for loyalty schemes.
UK shoppers have about three loyalty cards on average, but only use two of them, according to retail analysts TCC Global.
And there are signs that customers are becoming “disenfranchised” with the rewards on offer, says TCC’s Bryan Roberts.
Just 5% of shoppers would stop going to a store if it dropped its loyalty card, he adds.
What customers really want is the ability to turn rewards into family days out or Pizza Express meals – which might explain why Tesco’s move caused an uproar.
Tesco’s Clubcard, which was introduced in 1995, enables shoppers to earn points for money spent with the supermarket. The vouchers they generate can be used for restaurant meals or entry to attractions such as London Zoo, for example.
Some could be used for four times their face value. Tesco is now cutting most to three times their value – but has postponed the change until 10 June.
Alessandra Bellini, Tesco’s chief customer officer, said: “Customers have told us they want Clubcard to be simpler, and they’ve asked us to make it easier to get the most value from the points they collect.”
The end of the loyalty card has been predicted many times before, but what is different this time is that smartphone apps are an obvious replacement for physical cards, experts say.
But retailers and shoppers will not drop the idea of loyalty rewards anytime soon, argues Annich McIntosh, editor of Loyalty magazine.
The Co-op re-introduced its membership card in 2016 – and even though it cost £35m in the first half of last year, Co-op bosses think it is worth the expense.
Planet Retail’s Natalie Berg says Amazon’s Prime membership has become “an all-encompassing beast of a loyalty scheme” that gives access to books, music, TV, photo storage and next-day delivery.
“Store cards might go because a bit of plastic in your wallet isn’t necessary,” says Ms McIntosh. “But loyalty programmes aren’t on their way out – they matter too much to people.”