UK watchdog says supermarket loyalty scheme prices offer genuine savings

By James Davey

LONDON (Reuters) -British supermarket prices offered through loyalty schemes provide genuine savings, the competition regulator ruled on Wednesday, providing a boost to the major players who are increasingly relying on them to attract shoppers.

Loyalty schemes such as market leader Tesco's "Clubcard Prices" and No. 2 Sainsbury's "Nectar Prices" offer significantly lower prices for members and have proved hugely successful for the UK's biggest supermarkets.

The vast majority of UK shoppers now use them and an increasing number of products are covered by the schemes.

The Competition and Markets Authority (CMA) launched a review in January to consider their impact on shoppers. In July, it said it did not expect to identify widespread evidence of promotions misleading consumers.

On Wednesday it said an analysis of around 50,000 products on promotion found very little evidence of supermarkets inflating their "usual" prices to make loyalty promotions seem like a better deal.

It found shoppers can make an average saving of 17% to 25% buying loyalty priced products at the five supermarkets examined - Tesco, Sainsbury’s, Morrisons, Co-op and Waitrose.

"We know many people don’t trust loyalty card prices, which is why we did a deep dive to get to the bottom of whether supermarkets were treating shoppers fairly," said George Lusty, the CMA's interim executive director of consumer protection.

"We found that almost all the loyalty prices reviewed offered genuine savings against the usual price – a fact we hope reassures shoppers."

However, Lusty did note that the CMA's review had shown that loyalty prices were not always the cheapest option, and advised customers to shop around.

The British Retail Consortium (BRC), which represents the major grocers, welcomed the findings.

"We hope this report puts to bed some of the recent criticisms levelled against loyalty card schemes," said Andrew Opie, director of food & sustainability at the BRC.

Shares in Tesco and Sainsbury's were up 1% and 0.2% respectively.

As part of its review, the CMA also looked at the way supermarkets collect and use people’s data when they sign up to loyalty schemes. It did not see evidence of consumer law concerns in relation to this.

(Reporting by James Davey, editing by Paul Sandle and Jason Neely)