Recent research from Verdict revealed that by next year, Tesco will overtake Dixons as the UK’s biggest non-food retailer by sales (MW May 19). Meanwhile, Sainsbury’s has reported its first underlying sales growth for two years.
Clearly the supermarkets’ expanding non-food portfolios have helped to boost sales and profits, particularly in the case of Tesco, but what part do their loyalty schemes play in encouraging sales? To what extent do loyalty schemes encourage shoppers to return to retailers? What are these shoppers’ preferences – and who are they?
The latest TGI data reveals that between 2003 and 2004, the number of adult women (the key group of grocery shoppers) in the UK possessing a retail loyalty card rose by 500,000 to 20 million – a rise of four per cent since 2002.
Loyalty-card ownership varies little between TGI Lifestage groups, although there is evidence that shoppers with children at home are more likely to own a loyalty card. This is connected to a similar trend among those spending most on their weekly grocery shop.
Within the classic loyalty card ownership profile (35- to 44-year-old AB women with children), loyalty cards have a penetration of more than 90 per cent, and the number of cards held per person is almost ten per cent above the national average. Almost 88 per cent of women who regularly shop at Tesco for their groceries have a Clubcard, while of those whose loyalties lie more with Sainsbury’s, 84 per cent belong to the Nectar scheme.
Female “main shoppers”, unsurprisingly, are 25 per cent more likely than the population as a whole to say they regard loyalty cards as the key deciding factor when choosing which store to shop at – a figure that leaps to 44 per cent among those who have both Nectar and Tesco cards. Interestingly, Nectar members are 17 per cent less likely than average to rate price as the key determinant of store choice: Clubcard holders are only four per cent less likely. Those who have neither Nectar nor Clubcard membership are 15 per cent more likely than average to regard price as the most important factor in their choice of store.
Among Tesco Clubcard holders, the TGI research reveals some interesting attitudinal differences between Tesco shoppers who do belong to the Clubcard scheme and those who don’t. Generally, cardholders are much more likely to be attracted by coupons and special offers, to participate in on-pack competitions and to respond to direct mail.
Non-cardholders exhibit a slightly lower regard for own-label brands, express greater overall enjoyment of the “shopping experience” and are more likely to be driven by their own personal attitudes when deciding where to shop. They also prefer to shop around. Members of this group are more likely to shop at weekends, especially on Sundays, when compared to their cardholding counterparts.
Many of these attitudinal differences are evident between Nectar and non-Nectar members among recent “regular main shoppers” at Sainsbury’s – indeed, some of them are even more apparent. Non-Nectar cardholders also favour the early part of the week (Monday to Wednesday) for their major shop.
Overall, female Nectar members tend to be more experimental in their shopping than the average shopper, for instance in the types of foodstuffs they are willing to try. Nectar cardholders differ from the average UK woman in a number of their attitudes to finance. They are 20 per cent more likely than average to express an interest in financial services advertising and investing money for profit, and to consult a professional financial adviser.
TGI has found that Nectar members’ cross-loyalty to other Nectar stores has increased over time. In 2002, 1.25 million women who held a Nectar reward card and did their regular main shop at Sainsbury’s had also bought at least one item from Debenhams in the past year. By 2004, this had risen by some 20 per cent to about 1.5 million.
Clearly loyalty schemes have influenced people’s attitudes towards particular supermarkets and had an impact on their propensity to shop in these outlets. The supermarkets would do well to plough further investment into these schemes in order to encourage repeat visits to their stores.v