Supermarket loyalty schemes offer genuine savings for shoppers, according to the competition regulator following an investigation into claims of price manipulation.
The Competition and Markets Authority (CMA) said its review of 50,000 loyalty priced products showed that 92% offered genuine savings against the usual price.
That was despite 55% of shoppers thinking ‘usual’ prices were raised to make loyalty deals more appealing, it said.
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The watchdog’s report found “very little evidence” of supermarkets inflating their ‘usual’ prices to make loyalty promotions seem like a better deal but it did call on firms to bolster access to their schemes.
It was asked to investigate by the consumer group Which?.
Which? had complained that deals were “not all they were cracked up to be” but chains declared that the group’s own report on the issue had failed to take the effects of inflation into account.
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The CMA’s report was published at a time of year when supermarket chains tend to scrap for market share by offering discounts to lock in customers for their Christmas grocery shopping.
There is a chance, however, that stretched consumer budgets will benefit to only a limited extent this year as the retail sector faces pressure to save money and protect profits through looming leaps in costs arising from the budget.
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Major employers, such as grocers, have warned that hikes to employer National Insurance contributions from April will hurt jobs and investment while the rate of inflation has risen again above the Bank of England’s target.
Retail industry body the BRC warned earlier this week that food inflation could soon be on the rise due to rising costs, with the pace of increases for fresh produce already accelerating.
George Lusty, interim executive director of consumer protection at the CMA, said of its price probe: “We know many people don’t trust loyalty card prices, which is why we did a deep dive to get to the bottom of whether supermarkets were treating shoppers fairly.
“After analysing tens of thousands of products, we found that almost all the loyalty prices reviewed offered genuine savings against the usual price – a fact we hope reassures shoppers throughout the UK.
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“While these discounts are legitimate, our review has shown that loyalty prices aren’t always the cheapest option, so shopping around is still key. By checking a few shops, you can continue to stretch your hard-earned cash.”
The regulator said that while loyalty prices were generally some of the cheapest available, people could make an average saving of 17-25% buying loyalty priced products at the 5 supermarkets examined: Tesco, Sainsbury’s, Waitrose, Co-op and Morrisons.
As part of its review, the CMA said it also found no evidence that consumer laws were being breached by the way supermarkets collect and use people’s data when they sign up to a loyalty scheme.
Sue Davies, Which? head of food policy, responded: “Two-tier loyalty pricing has become a common practice across retailers. It’s therefore reassuring that the CMA has found that most of the prices it looked at across supermarkets offered genuine savings against the usual price.
“However, it stresses that it is worth shopping around as they aren’t always the cheapest option.
“Which? has also looked at prices for thousands of products and repeatedly found examples of loyalty price offers that aren’t as good as they seem. We have also raised concerns that millions of consumers are being excluded from accessing lower prices due to loyalty scheme restrictions.
“It’s therefore essential that supermarkets act on the CMA’s recommendation and do more to enable people to join their schemes.
“The CMA should continue to monitor loyalty pricing practices across key consumer sectors beyond supermarkets and be ready to use its new powers to take action against retailers that don’t comply with consumer law.”
