Some Supermarket loyalty deals may not be as good as they appear with examples of non-member prices that are seemingly an outright rip-off.
The research by the consumer magazine Which analysed the pricing history of almost 12,000 products at health and beauty retailers and supermarkets to uncover how genuine the loyalty savings were – exposing products with dubious discounts and items that are always on loyalty promotion deals, suggesting they do not always offer the value for money consumers might expect.
The investigation found concerning membership pricing practices at Boots and Superdrug and at supermarkets.
Which? surveyed shoppers and over half thought the non-member prices were higher than the usual selling prices of those products at the same retailer. Some shoppers even said they were suspicious that shops are hiking the non-member prices for some products to make the discounts seem better than they are. This is difficult to prove, so Which? set out to investigate.
The consumer champion believes the findings show why the guidance on how consumer law applies to pricing promotions needs to be updated to clarify how it applies to loyalty pricing, which is being adopted and rolled out across thousands of products by major retailers.
Better guidance would help businesses stay on the right side of the law and help regulators to take faster, effective action when shops flout the rules. The Digital Markets, Competition and Consumers Act will also soon give the Competition and Markets Authority (CMA) powers to hit businesses with fines, without going through the courts, to enforce the law.
On a snapshot day, Which? researchers looked at how many times the non-member prices on items with loyalty discounts had been in place during the previous six months.
At Superdrug, one in six (16%) of the products had been their non-member price for less than half the time. At Boots it was one in 10 (10%). For supermarkets, it was 10 per cent at Tesco, five per cent at Sainsbury’s and three per cent at Co-op.
Which? identified cases where prices were raised to a higher price for a relatively brief period before going on “offer”. An example Which? found at Superdrug was an Ultimate Day & Night Duo – Olay Regenerist & Retinol Bundle. This product was £71.98 for non-members, while for members it was £59.99. However, this product was only £71.98 for 13 days. Prior to that it was £35.98 for everyone.
At Boots, an Oral-B iO7 electric toothbrush (blue) was at a non-member price of £400, while the members price was £150. This product was only £400 for 13 days before, prior to that it was £150 for everyone.
Which? found 649 products at Boots where the price for non-members was raised on the same day the loyalty promotion began. Some of these might have been on a different kind of promotion immediately before the loyalty price launched, but the change raises questions about the tactics at play and if the non-member prices used to highlight the supposed savings are genuine.
Which? research found Superdrug’s loyalty prices offered an average 33 per cent off the higher non-member price. The three biggest supermarkets in the investigation all offered similar savings to each other: 25 per cent at Morrisons, 24 per cent at Sainsbury’s and 23 per cent at Tesco. Co-op and Boots both offered 10 per cent.
These discounts can look substantial but Which? believes the real question is whether they are genuine. If the non-member price has not been in place very long, or is much higher than the price at other shops – an issue Which? found evidence of during its investigation – the discounts may not actually be as good as they appear.
Last year, Which? revealed that some loyalty prices at Sainsbury’s and Tesco were not as good as they seemed – sparking a CMA probe into use of loyalty pricing in the grocery sector, with a report due later this year. It is important that the regulator clarifies how consumer law should apply to loyalty pricing. As part of this, the guidance on pricing practices, which is overseen by the Chartered Trading Standards Institute (CTSI), should be updated to provide greater clarity on how the rules should apply to loyalty pricing across sectors to ensure consumers are not misled.
The CMA must also continue to closely monitor loyalty pricing practices across key consumer sectors and be ready to use its new powers to take action against businesses that break the rules.
Ele Clark, Which? Retail Editor, said:
“Loyalty cards are increasingly big business, with the explosion in two-tier pricing meaning shoppers will often pay a lot more if they aren’t a member of the retailer’s scheme. But while the discounts can look impressive, many shoppers are growing suspicious of non-member prices that seem high.
“We looked at the pricing history of thousands of products and found that, while the majority of discounts were not misleading, there were some questionable non-member prices and some examples that looked like an outright rip-off. Meanwhile some products were always, or almost always, on loyalty promotion, making it difficult to spot a genuine deal.
“Guidance on pricing laws needs to be updated to include loyalty pricing, to help regulators crack down if businesses break the rules. The CMA should continue to monitor loyalty pricing practices across key consumer sectors and be ready to use its new powers to take action against retailers that don’t comply.”
