Sainsbury’s buys Nectar for £60m in move to take loyalty ‘to the next level’

The acquisition of Nectar-owner Aimia’s UK business is part of a strategic drive to help the supermarket know its customers “better than anyone else”.

Sainsbury’s has bought Nectar for £60m in a strategic drive to ensure it knows its customers “better than anyone else”.

The acquisition will see Sainsbury’s take over the UK business of Nectar-owner Aimia. That includes all assets, colleagues, systems and licences required for the full and independent operation of the Nectar loyalty programme in the UK.

“One of our strategic aims is to know our customers better than anyone else and obviously having ownership of the Nectar scheme allows us to do this and it’s a great opportunity,” a spokesperson for Sainsbury’s says.

There will be no change for customers as a result of the acquisition – and the organisational structure of the business will initially remain as it is. Nectar will also remain as a standalone scheme.

While there is a clear opportunity for Sainsbury’s in owning Nectar, it would seem the deal was in part led by Aimia’s desire to offload the programme.

Aimia’s group chief executive, David Johnston, says selling the Nectar business to Sainsbury’s – which was a founding partner of the Nectar coalition in 2002 – was the “optimal risk-adjusted outcome” for Aimia, and that it has worked to ensure a “seamless transition” for collectors and employees.

“The transaction allows for a sharper focus on Aeroplan, our largest and most profitable business, and simplifies our business all the while preserving a robust balance sheet for our ongoing business,” Johnston adds.

Nevertheless, Bryan Roberts, an analyst at TCC Global, believes the move will give Sainsbury’s the opportunity to move Nectar on to the next level – especially as consumers become “disillusioned” with traditional loyalty schemes.

“The main driver for Sainsbury’s bringing it in-house is that Nectar had lost some of its lustre as a genuine coalition loyalty programme after the departures of British Gas and Homebase,” Roberts explains.

“As Aimia points out, Sainsbury’s now encompasses grocery, financial services, energy, clothing, and general merchandise, therefore covering off many of the key categories for a typical retail coalition and is therefore Nectar’s largest issuance and redemption partner.

“Sainsbury’s can now take full control of the scheme, its data and the resultant insights that it and Aimia generated through i2c. Our research shows that shoppers have become a little disillusioned with traditional cards and points loyalty schemes, so this move gives Sainsbury’s the opportunity to move Nectar on to the next level.”

Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, says the deal will give Sainsbury’s “unparalleled access” to not only consumer habits within Sainsbury’s stores, but also within other operators.

“In today’s hyper-competitive grocery landscape, consumer data is king – for grocers, it helps them to market more effectively to consumers, optimise their ranges and maximise footfall,” Buxton says.

“With the Nectar loyalty programme under its roof, Sainsbury’s is putting consumers right at the front of its business, in contrast to the Tesco-Booker deal, where Tesco seems to be increasingly becoming a logistics operation.

“The deal will give Sainsbury’s unparalleled access to consumer habits within both Sainsbury’s stores and other operators, such as Vue Cinema, Ted Baker, and eBay, allowing it to refine product offerings, pricing and marketing.”

Hide Comments2 Show Comments
Comments
  • steve mcardle 1 Feb 2018 at 4:07 pm

    JS have picked up something of a bargain here in the January sales… but putting the energy back in Nectar will be hard, and I think that the other surviving retailers may well now re-think their participation given that a potential competitor can now (probably) access their customer data.

  • Nick Bush 1 Feb 2018 at 4:44 pm

    They’ve been pretty good in the past at leveraging Nectar with offers. As a semi-loyal customer I’ll be interested to see what level of customer intimacy they move to

  • Post a comment

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here