Sainsbury's halves loyalty reward points - UK
Fin24 - Oct 15th 2014, 10:49
London - British supermarket Sainsbury's is to halve the number of Nectar reward points it gives holders of its loyalty card in the latest sign that an escalating price war is forcing grocers to re-evaluate the merits of shopper retention schemes.
Sainsbury's, which is battling with Wal-Mart Stores' Asda to be Britain's No.2 grocer behind Tesco, told customers on Tuesday that from April 11 next year it will award only one Nectar point for every pound spent.
Nectar cardholders can use points to pay for their shopping, with 500 points worth £2.50 ($3.98).
Sainsbury's is also scrapping the award of one Nectar point each time a customer uses his or her own bags, although shoppers will still earn one Nectar point per litre of fuel purchased.
Loyalty cards, pioneered by Tesco's Clubcard two decades ago, are widespread throughout Britain's retail sector, allowing store operators to garner information on the likes and dislikes of their customers.
A spokesperson for Sainsbury's said that despite the changes, there would be benefits to shoppers, including more "high-value bonus events" such as 10 times points on fuel and additional categories in its Christmas "Double Up" event.
Sector analysts said that they suspected the move reflected the need to cut costs and align the Sainsbury's proposition to a market in which pure price and simplicity are becoming increasingly important.
However, the Sainsbury's spokesperson said there are no cost savings from the first 12 months of the new Nectar scheme - the extent to which the promotions calendar is planned so far - and all cash will be redistributed into the bonus events.
Last month Sainsbury's said, it would only benchmark prices with Asda, no longer including Tesco in its "Brand Match" price-comparison scheme - a move that will save on administration costs.
Like its big four rivals, which also includes No. Morrisons, Sainsbury's has been losing market share to discounters Aldi and Lidl. All of the big four have responded by cutting prices.
This month Sainsbury's posted a third straight fall in quarterly like-for-like sales, cut its annual sales forecast and said it would review its dividend as part of a wider examination of the business, adding to the turmoil in a sector reeling from an accounting scandal at Tesco.
Shares in Sainsbury's, which have lost 38% of their value so far this year, were down 0.7% at 227 pence by 14:54 GMT.
Two weeks ago Morrisons launched its first ever customer loyalty card. Its "Match & More" card guarantees to match Aldi and Lidl as well as traditional rivals on price.
Some analysts have speculated that new Tesco chief executive Dave Lewis will review the retention of its Clubcard scheme.
In August John Lewis, Britain's biggest department store chain, dropped one of the key benefits of its loyalty card scheme - regular free tea, coffee and cake - less than a year after introducing the perk. From Fin24.com
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