Blog | 22 January, 2018

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Loyalty is alive and kicking, but its form will shift

Following Tesco’s announcement that it was cutting some of its Clubcard rewards, the backlash began. Founder of MoneySavingExpert.com, Martin Lewis, said: “Tesco has seriously misjudged the mood here, especially as by definition those hardest hit were its most loyal customers.”

Tesco’s Clubcard, which was introduced in 1995, enables shoppers to earn points for money spent with the supermarket. The vouchers they generate can be used for restaurant meals or entry to attractions, some worth as much as four times their face value. Tesco has now announced it is reducing these vouchers to three times their value – but the supermarket has now backtracked and delayed the cut until the summer. Alessandra Bellini, Tesco’s chief customer officer, explains: “Customers have told us they want Clubcard to be simpler, and they’ve asked us to make it easier to get the most value from the points they collect.”

The consumer backlash over Tesco’s move shows shoppers still care about loyalty rewards. Loyalty schemes are a long way from being phased out – loyalty matters to consumers. Consider this, the Co-op re-introduced its membership card in 2016 and, even though it cost £35m in the first half of last year, Co-op thinks it is worth the expense.

However, loyalty schemes in their current form will not last. The move by Tesco is part of a wider trend, with the days of shoppers using plastic loyalty cards and collecting supermarket reward vouchers now numbered.

“This concept of swiping a card at the till is dated. It’s not what attracts us to a supermarket,” says retail analyst Natalie Berg of Planet Retail.

“It’s the final stages of loyalty cards, but not of loyalty schemes” says Martin Lewis. “The idea that it’s a piece of plastic, and that you get points back and vouchers, is going to go.”

Plastic loyalty cards are likely to become a thing of the past as they are replaced with technology that still offers discounts, such as coupons or vouchers. Apps are an obvious and convenient solution to replace the myriad plastic cards in shoppers’ wallets – with some smartphone apps enabling users to upload all their loyalty cards into one place.