Loyalty cards seem to help shoppers save money. Customers share some personal information and receive points, discounts or rewards.
Loyalty cards appear to offer customers a simple benefit. Shoppers share some personal information and receive points, discounts or rewards. At first, this seems like a good deal. Why pay full price when scanning a card can reduce the cost immediately?
However, loyalty schemes are not simply generous gifts from shops. They are marketing tools designed to influence where people shop, what they buy and how often they return. Customers can make real savings, but loyalty programmes can also encourage them to spend more than planned.
These schemes are now extremely common in the United Kingdom. A 2024 survey by the Competition and Markets Authority found that 97 per cent of UK grocery shoppers belonged to at least one supermarket loyalty scheme. The average shopper had 3.1 memberships, while 21 per cent belonged to five or more.
Many loyalty discounts are genuine. The CMA examined around 50,000 products sold at loyalty prices and found that 92 per cent offered a real saving compared with the usual price. Average discounts at several supermarkets were between approximately 17 and 25 per cent.
However, saving money on one item does not always mean spending less overall. A discount may attract a shopper into a particular supermarket, where they then buy several unplanned products. They may also choose a discounted branded item even when a cheaper own-brand version is available.
The discount is real, but the final bill may still be higher.
Retailers make strong use of salience. A bright sign showing “£5 without the card, £3.50 for members” makes the saving easy to notice. Customers focus on the £1.50 difference, but may pay less attention to the total cost of their shopping.
The original price also creates a reference point. Once shoppers see £5, the loyalty price of £3.50 seems cheap. They may not compare it with the same product in another shop or with a less expensive alternative.
This may explain why some customers feel pressured to join. In the CMA survey, 72 per cent of shoppers agreed that loyalty prices made them feel they had to become members to save money. Among people aged between 18 and 29, the figure was 83 per cent.
The card may therefore feel less like a reward and more like a way to avoid paying a higher price.
Points programmes use another method called gamification. Customers collect points, complete challenges or move towards a reward. Shopping begins to feel like a game.
For example, a coffee app may show ten spaces leading to a free drink. If a customer has completed eight spaces, they may feel strongly motivated to buy two more coffees. They might continue visiting the same chain even if another café is cheaper.
The reward may not be worth very much, but people often dislike wasting their previous effort. They continue buying because they want to complete the process.
Rewards can also create reciprocity. When a company sends a birthday voucher, free sample or surprise bonus, customers may feel recognised. They may then want to return the favour by making another purchase.
However, these offers are not always random. Retailers may send them when customer data suggests that a person is likely to buy something, return to the shop or choose a more expensive product.
Loyalty programmes also create inertia. Once customers have collected points, changing to another retailer can feel like losing something they have already earned. They may stop comparing prices because switching would delay their next reward.
This can be especially powerful with airline miles, supermarket vouchers and membership levels. The more progress customers make, the more difficult it may feel to leave.
Research cited by the CMA suggested that more than two-thirds of people using supermarket loyalty schemes said promotions had influenced where they shopped. Another study found that 27 per cent of shoppers were moving more of their spending towards supermarkets offering loyalty prices.
These figures do not prove that loyalty cards cause every extra purchase. People who already like a supermarket are more likely to join its scheme. However, points and rewards can still make shopping elsewhere feel like a loss.
The most valuable part of a loyalty programme may not be the points. It may be the information collected every time customers scan their cards.
Retailers can build a granular record of what people buy, when they shop, how much they spend and which offers influence them. Over time, a supermarket may learn whether someone has children, owns a pet, prefers expensive brands or becomes more careful with money near payday.
This allows retailers to send personalised offers. A customer who often buys pasta may receive a discount on pasta sauce. Someone who has stopped buying a particular brand may receive a voucher designed to attract them back.
These offers feel useful because they are relevant. However, they are also effective at increasing sales. A retailer may encourage customers to buy a larger packet, a related product or a more expensive option.
Many customers know that stores collect their data. The CMA found that 72 per cent of loyalty-scheme members were aware of this. Sixty-one per cent were comfortable with their information being used to create personalised offers.
However, 68 per cent were uncomfortable with supermarkets sharing their data with other companies for targeted advertising.
Loyalty cards can be useful. They can reduce the price of products customers already plan to buy and provide valuable vouchers. The problem begins when people purchase unnecessary items to collect points or choose expensive products simply because they appear discounted.
A shopper who saves £10 but spends £30 more than planned has not truly saved money.
Loyalty schemes work because they turn ordinary shopping into progress, achievement and reward. They do not force people to spend, but they influence how choices are presented. The best approach is to compare final prices, follow a shopping list and ignore rewards connected to products that are not needed.
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