Asda strikes back at loyalty card credibility

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By: Wise Marketer Staff |

Posted on September 14, 2002

UK supermarket chain, Asda, has released details of research suggesting that plastic cards are failing to keep customers loyal, and that the UK's shoppers prefer lower prices to loyalty points. The publication comes amid the launch of the national coalition loyalty programme, Nectar.

The survey, conducted at the beginning of September 2002 by NOP, indicated that 93% of shoppers prefer lower prices to loyalty cards, and that they suspect loyalty cards of pushing up prices to cover their costs.

Consumer apathy?
According to NOP, many consumers are saying that loyalty cards make very little difference to where they shop, backing figures from retail researchers Taylor Nelson Sofres (TNS). The TNS figures show sales growth at Asda and Morrisons (loyalty card sceptics) outpacing those of Tesco and Sainsbury's (loyalty card advocates) by 10% over the past two years (26.5% growth in customer spend for the sceptics, compared with 16.3% growth in customer spend for the advocates).

According to the survey, the 45 to 54 year olds were the most sceptical about loyalty cards with 76% saying they make little difference to where they shop. The most sceptical region of the UK was, perhaps unsurprisingly, Yorkshire (the birthplace of Asda). Surprisingly, some 93% of Sainsbury's shoppers and 95% of Tesco shoppers said they would also choose lower prices over loyalty cards, given the choice.

Investing in lower prices
Asda continues with its policy of price lowering, which it has kept since it abandoned its own loyalty card pilot in 1999. The company expects to invest 200 million in lowering prices during 2002, with 50 million scheduled for the final quarter of the year.

"Our customers aren't fooled by marketing gimmicks," asserts Asda's deputy COO, Richard Baker, adding, "Their real loyalty comes from offering the lowest prices on the right range of products."

The NOP telephone survey was conducted between August 30th and September 1st, 2002, and involved a sample of 999 adults from around Britain. The results were then weighted to represent Great Britain demographics.

Survey highlights
The survey revealed some interesting consumer attitudes and perceptions concerning loyalty card programmes:

  • Do you believe stores raise prices in order to fund a loyalty card? Over half (55%) thought that stores probably or definitely raised prices to fund loyalty cards, with 70% of 45-54 year olds thinking this was the case.
  • How important are loyalty cards in encouraging you to remain loyal to a store? Quality (64%), price (50%), service (46%) and range (43%) were rated as 'very important' in keeping shoppers loyal, compared to 7% for plastic loyalty cards.
  • To what extent would shoppers rather have lower prices? Some 58% said they agreed strongly that they'd rather have lower prices than cards, rising to 73% when including those who simply agreed (but not necessarily 'strongly').
  • If you had to choose between loyalty cards and lower prices, which would you rather have? Almost everyone (93%) still prefers to pay lower prices at the check-out. Regionally, this figure was 91% in London, rising to 93% in Scotland, and 100% in the West Country.
  • Have views about loyalty cards changed over the past few years? A minority (12%) said loyalty cards had improved, whilst the majority (73%) said their view of them hadn't changed. That leaves only 15% of shoppers who think less of loyalty cards than they did a few years ago.

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