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21 December 2017

Supermarket Loyalty and Reward Schemes

We all use supermarkets and can all benefit from getting a little something back every once in a while, from the supermarkets to which we often show a great degree of loyalty. Loyalty cards for supermarkets where originally designed and created to provide the offer of rewards to their regular customers. In turn, the rewards system would encourage these customers to continue shopping in the same supermarket in order to build up and cash in these rewards.

How Supermarket Loyalty Schemes Work

A loyalty card allows you to collect points in the supermarket providing the card. The points accrued through customer purchases build up as you spend and the more you spend, the more points you earn. Unlike a credit card or store card, you cannot actually ‘pay’ with a loyalty card. This is only possible when redeeming points. This does however mean that you have to return to the store to make a purchase based on points. Furthermore, in nearly every case, you will have to collect a particular number of points before they are ‘redeemable.’

In most loyalty schemes you will earn one point for every £1 you spend in store. With the Tesco Club Card for example, you will also earn half a point for every £1 you spend on petrol. Every point is worth a penny, so to make £1 in points you will have to spend £100 in ‘real’ cash.

Supermarket Loyalty – The Pros and Cons

Some financial experts disapprove of the use of ‘loyalty’ in supermarkets as it creates slaves out of consumers, discouraging us to look elsewhere at the competition who may be offering cheaper and better deals. Additionally, many feel that loyalty is not always rewarded, with a penny a point not amounting to terribly much in the form of money and savings until a long time later. It is important to note that earning points is not a replacement for money and should not be viewed as ‘better’ than saving money elsewhere, for example through day to day money saving practices around the home.

Other financial experts do however believe that supermarket loyalty can be a great way to save on your shopping bills and ultimately save you money. Before signing up to a loyalty card scheme with a particular supermarket, do your homework and consider:

  • Which one offers the best deals for your lifestyle and shopping choices?
  • Is it possible to pick a local store?
  • Which loyalty card offers the best perks and rewards?
  • Do you spend enough to actually reap the benefits from a loyalty card?

It is also important to consider whether or not as the customer you can afford to spend the money that will translate into points, no matter the loyalty scheme you are signed up to. Moreover, as with short term loans online, customers should do their homework and research all of the options around.

Are Loyalty Cards Worthwhile for Supermarket Spending?

If you are an avid shopper at a particular shop or supermarket and do not see yourself swapping to a competitor any time soon, despite potentially better deals being available, the answer is yes. Collecting enough points can of course save you money on your food shopping, and in some cases, it can save you money on things like transport and retail goods. 

For example, a Nectar card is best known as the loyalty card for Sainsbury's, but you are not limited to just Sainsbury’s. You can use your Nectar card to collect points in places like House of Fraser, Homebase and Vision Express. You can also collect points by booking holidays with their booking partner, Expedia.

Moreover, with a Nectar card, not only can you collect points elsewhere, you can spend them elsewhere. A perfect example of this is that Virgin Trains allows you to spend your points to get money knocked off of their trains fares. This can take an expensive trip or a first-class ticket down to the realms of much cheaper prices (and even totally free if you have enough points built up in your account.) Nectar points can also be used for days out, restaurants and theatre tickets.

However, to earn £1 in points you would have to spend £100 in real cash. Considering that does not have to be spent exclusively in the supermarket itself, but also in a number of retail stores and on travel or other purchases, the points card may well be worth it as you are likely to spend £100 and more in the supermarket alone over a few months, so when you factor in the other methods by which you can collect the points, it can in fact be very worthwhile.

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk