In light of Morrisons’ new loyalty card and Lidl’s ensuing tongue-in-cheek advert, are loyalty schemes still relevant for keeping customers?
“Morrisons has found a way to match Lidl’s prices” proclaimed the latest advertising campaign from the German discounter, following the launch of Morrisons’ new loyalty card that will be the first to price match against Aldi and Lidl.
But with its tongue firmly in its cheek, Lidl then went on to list a 28-point process customers must battle through to make that saving, before concluding: “Or you could just go to Lidl”.
While clearly meant to poke fun at its rival, the campaign also raises a serious note: have loyalty cards as a means of engaging consumers had their day?
In an age when more than 90% of adults own at least one loyalty card and the data gleaned from tracking shopper behaviour is increasingly used to target, segment and customise product and offers to customers hungry for personalisation, it may seem counterintuitive to question the role of these schemes.
However, it is hard to ignore the fact that Tesco to a larger degree and Sainsbury’s on a smaller scale – those grocers recognised to have the most embedded loyalty programmes – are struggling to retain customers.
Meanwhile, Aldi and Lidl have picked up over a million new shoppers in the last year, operate no loyalty scheme, but instead choose to cut through the noise with the simplest proposition of low prices, fewer promotions and a streamlined offer.
“Have loyalty cards as a means of engaging consumers had their day?”
Chris Brook-Carter, Editor-in-chief
In a recent poll of more than 2,000 consumers conducted by ICM on behalf of Retail Week, there was evidence to suggest shoppers understand the value of owning a loyalty card, but are as promiscuous in their use of them as they have become in their shopping habits in general.
While 94% were part of a loyalty scheme, the average number of cards held by shoppers was three. And only half saw cards as driving their loyalty.
In such circumstances, it’s hard to refute the claims made by Aldi’s joint managing directors Matthew Barnes and Roman Heini in an interview with Retail Week last week that the noise in the grocery sector around “closing the pricing gap” on the discounters was only acting to promote to shoppers the idea of trying the low cost grocer.
And Morrisons’ efforts to include Aldi and Lidl in its price match scheme may only further validate their models.
“Customers have lost trust in supermarket pricing,” warned incoming Morrisons chairman Andrew Higginson this week. Price matching is a bold but complex effort to assure shoppers the big grocers are on their side.
But when it comes to the simplicity of Aldi and Lidl’s offer, consumers are voting with their feet. And the lengths these schemes need to go to in order to convince them otherwise once again highlights the scale of structural change the big four are facing.
- Chris Brook-Carter, Editor-in-chief