No sooner has Nectar launched than it seems to run into the expected criticism (MW September 19): criticism about value of rewards; criticism about the failure of the website to accept registrations. We now have criticism from Asda (perhaps not unexpected) stating that 93 per cent of UK shoppers prefer lower prices on goods than collecting points that can be put towards gifts and rewards.
Asda may have a point in that it can make cost savings to be passed on to the customer by not running a loyalty programme. But customers also need to be enticed to the store: are low prices enough in the face of a loyalty programme?
Yes, once the customer is in the store. Getting them there is the challenge – to achieve this, Sainsbury’s competitors will need to respond aggressively to any potential loss in market share with an increase in other promotional activity.
Asda and other retailers need to think about the role of promotions: UK shoppers are increasingly aware of promotions and are responsive to good ones. Targeted local initiatives focusing on value-added promotions are a good way to draw customers.
The issue for marketers and retailers is that they don’t need to shy away from such promotions. Increasing footfall (and sales) takes investment in promotions that, although they may have a financial liability, can be mitigated through insurance to ensure that promotional budgets work as hard as possible and the consumer is targeted with the promotion that appeals to them.
Promotional Risk Management