Are supermarket loyalty schemes on the way out?

Could Tesco’s decision to cut back on its Clubcard rewards simply be the first of many? Changing shopping habits mean we no longer value loyalty schemes as much as we once did.

Earlier this week, Tesco raised the ire of shoppers by announcing changes to its hugely-popular rewards scheme.

While it was sold by the supermarket as a way to simplify the scheme, what it meant, in reality, was many rewards had dropped 25% in value.

The move went down as well as you’d expect, with shoppers expressing their anger on social media.

In fact, the publicity got so bad that Tesco announced yesterday (January 17) that it has postponed the planned changes, with a new date yet to be confirmed at the time of publishing.

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Death of the loyalty scheme?

With that in mind you might think that other supermarket giants would have looked at the Tesco debacle and decided that tinkering with their respective loyalty schemes simply isn’t worth it.

Not so, argues Planet Retail, a market research and retail analysis firm.

With shoppers increasingly visiting numerous stores/sites to get the best deals, the notion of the loyal shopper is dying out.

"Shoppers are no longer monogamous,” Natalie Berg, research director at Planet Retail, tells the BBC.

“The idea of being loyal to a particular supermarket is a thing of the past.”

Another result of this changing behaviour is that loyalty schemes are no longer as important as they once were.

A clear example of this is the dramatic rise of discounters Aldi & Lidl, which now account for almost 12% of the UK grocery market and pose genuine threats to the established ‘big four’ supermarket giants.

Neither offer any loyalty cards and instead focus on price rather than gimmicks.

“This concept of swiping a card at the till is dated,” says Berg.

“It's not what attracts us to a supermarket.”

As a further indication of the falling status of loyalty schemes, a poll by analysts TCC Global found that just one in 20 people would stop shopping at a store if they scrapped their programme.

Admittedly that wasn't focused solely on supermarkets, but it's a staggering figure nonetheless.

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Loyalty schemes will adapt to the times

That’s not to say that supermarket loyalty schemes are about to disappear – the angry response from Tesco shoppers to this week's announcement shows many still value them – but at the very least it means they will need to catch up with changing shopping habits.

Rather than having a card for each store you shop at in your purse or wallet, the earning and spending of points needs to become far more seamless.

It seems supermarkets have started to wake up to this: when Tesco switched to a contactless Clubcard last July, it’s telling that the supermarket giant also overhauled its Clubcard app to make it easier to manage your rewards and spending through your phone rather than waiting for quarterly coupons in the post.

What do you think? Are loyalty schemes still important to you? Do you shop at a specific supermarket because of the rewards on offer? Share your thoughts in the comments section below.