Loyalty cards are becoming a necessity for many in the UK, as the cost of living crisis has become unavoidable. But what’s in it for retailers?
Schemes like Tesco’s Clubcard and Sainsbury’s Nectar Card, which give holders discounts on selected items, are valuable tools in any Brit’s money-saving arsenal.
These discounts can make a big difference, too. A Nectar Card drops a Goodfella’s Thin Pepperoni Pizza from £3.00 to £1.50, and a bottle of Gordon’s Gin from £24.00 to £18.00.
Supermarkets aren’t above deception with these prices, however. A Which? article from earlier in the year gives plenty of examples where a supermarket will raise the price of an item, before offering the original price as a discount price a few weeks later. At Tesco, Blue Dragon Sweet Chilli Sauce rose from £2.00 to £2.70 only eight days before they gave it a Clubcard price of £2.00.
Most importantly for retailers, however, loyalty cards are an extremely effective tool for collecting consumer data.
This includes everything from your address, contact and payment details to every individual purchase. The data is used by the collecting company to learn your spending habits for targeted advertising and, more concerningly, sold to other firms.
Nectar, for example, works with more than just Sainsbury’s. Any personal information collected by your Nectar card is automatically available to its other partners – an exhaustive list of companies including British Airways, American Express and even the Daily Mail.
Since the Data Protection Act was passed in 2018, you can actually find out what information a company holds on you through a Subject Access Request (SAR).
Submitting one to Sainsbury’s and Nectar, I found that my Nectar card had recorded every single one of my purchases, with precise time and location. I had bought 11 packets of mushrooms in a month and, unsurprisingly, my contact, address and payment details were all recorded – making them available to every single one of Nectar’s partners.
The unfortunate fact is, if we want to save money, we just have to accept that that’s what’s happening with our data – and the numbers reflect this.
According to a survey by McKinsey and Co., only 18% of people trusted retail companies to protect their personal data, and data protection was a growing concern for most people. Despite this, however, very few people are taking adequate action to protect their personal data.
Loyalty schemes are becoming more widespread than ever, with Aldi, Co-op, Iceland and almost any other major retailer you can think of having their own loyalty card – and while we think they’re still worth owning, it’s best to keep in mind what’s in it for them.