Consumer NZ finds supermarket loyalty card 'specials' fail to offer genuinely good deals

Consumer NZ has found many items marked with supermarket loyalty card discounts could be bought for a lower price at stores not using loyalty schemes. 

The watchdog analysed* the price of 48 products that had a Onecard or Clubcard discount, and that were also available at Pak’nSave and The Warehouse (neither of which use a loyalty discount scheme).

“Three-quarters of the loyalty discounted products we looked at were available at an equal or lower price by shopping elsewhere,” said Gemma Rasmussen, Consumer head of research and advocacy.

At the time of the analysis, if you used a Onecard when purchasing a Moccona Classic Medium Roast Instant Freeze Dried Coffee Refill, it would set you back $11. Pak’nSave’s price for the same item was $8, a significant saving of 27% on Countdown’s “special” loyalty price.

A one litre bottle of NZ Natural Sparkling Water would cost a New World customer $1.79 if they used their Clubcard. At that time, the same product cost 46% less at The Warehouse – coming in at 97 cents.

A 765g box of Kellogg’s Nutrigrain cost $7.99 at Pak’nSave. New World Clubcard holders could spend 13% more and buy the same product for the special price of $8.99.

“Time and time again we found The Warehouse or Pak’nSave were considerably cheaper than the so-called special pricing offered to loyal customers of New World or Countdown,” said Rasmussen.

The lure of loyalty cards

As part of its campaign to stop dodgy supermarket specials, Consumer polled its supporters and found 95% were tempted, to some degree, by specials, while 84% were armed with a loyalty card.

Consumer’s latest Sentiment Tracker survey also found 15% of shoppers took loyalty programmes into account before they made a purchase. 

“Supermarkets understand the persuasiveness of a ‘special’ or ‘loyalty deal’ and we are concerned shoppers are paying more than they need to because of this.

“It is questionable whether the supermarket loyalty ‘specials’ are actually good deals when the same products can consistently be found cheaper elsewhere.”

Consumer contacted the duopoly for comment on its findings. Both Foodstuffs and Woolworths provided responses but failed to address the crux of the issue.

The data dilemma

Supermarkets also benefit from loyalty card programmes through the huge amounts of customer data they collect.

“Some data collected via a shopper’s loyalty card is pushed into a larger data ecosystem, then used to serve that shopper with targeted advertising from third parties.

“While this practice is legal, it raises questions about how this data collection is disclosed to shoppers.”

Following its market study into the grocery sector, the Commerce Commission recommended information relating to loyalty programmes’ data collection and use should be clear and transparent.

Problematic pricing

Promotional pricing is enticing, and with so many specials on display it Is hard for shoppers to know whether they are genuinely getting a good deal.

“Our analysis shows that some loyalty card discounts are not the great deals they appear to be, and it pays to be skeptical.

“We recommend shoppers use tools like Grocer.NZ to compare prices at their local supermarkets, The Warehouse and online retailer Supie.

“We are not suggesting that people hop between stores to stock their pantry, but our analysis backs up our long-held belief that there is little, if any reward, in being loyal to one chain or store.”

* Prices were collected from Auckland and Wellington supermarkets over a one-month period.