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Consumer Group Claims Supermarket Loyalty Card Discounts Masked by Inflated Regular Prices

Leading consumer rights organization Which? has alleged that supermarket loyalty schemes employed by Sainsbury’s and Tesco are concealing the true extent of price hikes. According to Which?, the supermarkets artificially inflate the regular prices of products, making the promotional prices offered to loyalty card members appear as better deals than they actually are.

Both Sainsbury’s and Tesco have rejected these claims, citing overall price increases due to inflation. In recent months, inflation has reached historic highs, with food prices hitting record levels.

Which? conducted a six-month investigation tracking pricing history in stores to assess whether the regular prices advertised were indeed the standard prices at which items were sold over a reasonable period. The investigation revealed that approximately one-third (29%) of member-only promotions were at their alleged regular price for less than half of the six-month period.

The consumer watchdog’s investigation into the widespread use of loyalty card schemes by supermarkets focuses on schemes that restrict access to lower pricing tiers to customers who have signed up for these programs. Among the findings were instances where products had their regular prices inflated just before the introduction of loyalty card promotions, potentially misleading customers into believing they were getting significant discounts.

One example cited was a 200g jar of Nescafe Gold Blend Instant Coffee advertised at Sainsbury’s for £6 with a Nectar card, supposedly saving customers £2.10 from the regular price of £8.10. However, Which? claimed that the regular price had been £6 at Sainsbury’s until it was raised to £8.10 only two days before the Nectar card promotion began. Sainsbury’s contested this claim, stating that the regular price had been £8.10 since December 2022 and that £6 was a promotional price throughout the year, including during the Nectar Prices launch in April.

Another example involved Heinz Salad Cream (605g) at Tesco, which had a Clubcard price of £3.50 and a regular price of £3.90, despite the regular price being £2.99 for several weeks prior to the increase to £3.90, which occurred just 22 days before the Clubcard promotion. Which? found that the condiment had remained at its regular price for only 14% of the previous six months.

Which? has shared its findings with the Competition and Markets Authority (CMA) and has urged the CMA to investigate whether supermarkets are raising their regular prices to create the impression of discounts for loyalty scheme customers.

A spokesperson for the CMA responded, stating that grocery prices are a significant concern for people across the country, and shoppers need assistance in identifying the best value for their money. The CMA has an ongoing program of work related to the grocery sector and will consider the information provided by Which? regarding its recent investigation into loyalty card pricing.