Loyalty cards may not be such a good deal given the “opaque and confusing” pricing, according to an investigation by consumer group Which?, which uncovered questionable discounts at drugstores, beauty shops and supermarkets.
Which? researchers examined how often non-member prices applied to loyalty discounted items over the past six months.
At Superdrug, one in six (16%) products were available at the non-member price less than half the time. At Boots, it was one in ten (10%). Among supermarkets, it was 10% at Tesco, 5% at Sainsbury’s and 3% at Co-op.
The consumer organisation has found cases where prices were increased for a relatively short period of time before going on ‘sale’. One example at Superdrug was an Ultimate Day & Night Duo – Olay Regenerist & Retinol Bundle. This product cost £71.98 for non-members, but £59.99 for members. However, this product only cost £71.98 for 13 days. Before that, it cost £35.98 for everyone.
At Boots, the Oral-B iO7 electric toothbrush (blue) cost £400 for non-members and £150 for members. This product was only £400 for 13 days before the offer, before that it cost £150 for everyone.
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At Morrisons, the Lindt Lindor Cornet Blood Orange Truffles (200g) cost £6.30 for non-members but £4.50 for members. Which? found that the £6.30 price only lasted for just over a month before the loyalty promotion began. Before that, the chocolates were £5 for everyone. There was another promotional discount on this product that didn’t require a loyalty card.
At Sainsbury’s (SBRY.L), Ariel All-in-1 Pods liquid detergent capsules for 39 washes cost £10.50 for non-members but £9.50 for members. They were only £10.50 for 28 days. Before that they were £10 for everyone and just over two months before that they were £9.50 for everyone.
At Tesco (TSCO.L), the Ambre Solaire Ultra-hydrating Sun Cream Spray SPF30 200ml cost £8 for non-members and £6 for members. However, it was only £8 for 14 days. Before that, it was £6 for everyone.
Shoppers are also becoming increasingly wary of loyalty pricing: over half (55%) of Which? respondents said prices for non-members were higher than the usual retail price for these products at the same retailer.
Some shoppers said they believed stores were raising prices for non-members on certain products to make the discount appear larger than it actually was.
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When looking at loyalty promotions on branded goods where the non-member price was valid for less than half the time in the previous six months, prices at Sainsbury’s were 13 percent higher than at Waitrose, while prices at Tesco were 10 percent higher than at Waitrose.
Ele Clark, retail editor at Which?, said: “Loyalty cards are increasingly becoming big business. The explosion of two-tier pricing means shoppers often pay a lot more if they are not a member of the retailer’s scheme. But while the discounts can look impressive, many shoppers become wary of seemingly high prices for non-members.
“We looked at the pricing history of thousands of products and found that the majority of discounts were not misleading, but there were some questionable pricing for non-members and some examples that looked like outright rip-offs.
“Nowadays, there was always or almost always a loyalty promotion for some products, making it difficult to recognize a real bargain.”
Which? found 649 products at Boots that had their price increased for non-members on the same day the loyalty promotion started. It said some of these may have been in another type of promotion immediately before the loyalty price started, “but the change raises questions” about the tactics used and whether the “non-member prices used to highlight the supposed savings are genuine”.
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The study found that Superdrug’s loyalty prices were, on average, 33% cheaper than the higher prices charged to non-members.
The three biggest supermarkets in the study all offered similar savings – 25 percent at Morrisons, 24 percent at Sainsbury’s and 23 percent at Tesco. Co-op and Boots each offered 10 percent.
Which? is calling for an update to the guidance on the application of consumer law to price promotions to more clearly define how these apply to loyalty pricing adopted and implemented by retailers on thousands of products.
The Competition and Markets Authority (CMA) launched an investigation in January to examine the impact on customers of supermarkets’ loyalty card schemes that offer cheaper prices only to loyalty card holders.
The regulator has said its ongoing review of loyalty pricing in supermarkets is unlikely to find widespread evidence of promotions misleading customers.
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