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In a few short months, Sainsbury’s has scaled up its Nectar Prices initiative – which offers discounts to loyalty scheme members – to the point it is close to parity with Tesco’s Clubcard Prices in terms of the breadth of products included
As of 25 August, Sainsbury’s Nectar Prices scheme consisted of over 4,000 products online and in store, just four months after its launch. Tesco Clubcard Prices were launched in 2019 and extend to almost 6,000 products.
But how do the two schemes compare? How do their prices match up against one another? And how competitive are they against rivals?
Despite the rapid growth of Nectar Prices, Tesco’s Clubcard is the one that offers the biggest saving on average.
The Grocer analysis of prices – also on 25 August – using Assosia data, found Clubcard offered an average saving of 25.7%, more than the Nectar card average of 24.6%.
In cash terms, the Clubcard is also winning out, with an average saving of £1.53, compared with £1.39 for Nectar. Nectar prices include only single product promotions, whereas Clubcard contains some multibuys too. When Tesco’s multibuys are taken out of the equation, the difference is even more stark – Clubcard single product promotions save shoppers an average of £1.91.
Some Clubcard deals are better than half price: Sanex Agave Replenishing Shower Gel 225ml was £1.40 on Clubcard, down from £3.
And in drinks, Shloer White Grape 750ml was on Clubcard for £1.30, a saving of £1.35 from the original price of £2.65.
Nectar offers the single product with the greatest saving in percentage terms: Heinz vegetable soup 400g was 50p on Nectar, a 71% saving on the original price of £1.70.
Nectar offers a range of half-price deals too, including Pizza Express American Pepperoni Pizza 250g, which was £3, down from £6.
Sainsbury’s offers better deals in another sense: the products simply cost less. Sainsbury’s Nectar price products start at a lower price point and end at a lower price point than Tesco’s Clubcard products. The average Nectar price is £3.88, while at Tesco it is £4.04. When multibuys are excluded at Tesco, the average Clubcard product is almost £5 (£4.91).
The higher percentage and cash saving with Clubcard is likely to at least in part result from Nectar products costing less overall.
But Tesco also does better in terms of how competitive its Clubcard prices are compared with rivals. Of Clubcard products with at least one comparable product in Sainsbury’s, Asda and Morrisons, 36% are exclusively cheapest on Tesco Clubcard.
Nectar Prices, on the other hand, are only exclusively cheapest across 29% of its deals against comparative products at Tesco, Asda and Morrisons.
The focus of the two retailers is different when it comes to category breakdown. For both Nectar and Clubcard, the largest proportion of deals is in health and beauty, at 21.8% and 18.5% respectively. But while Nectar Prices focuses more on the frozen and petcare categories, Tesco is bigger when it comes to baby, home & entertainment and household.
Sainsbury’s had 302 frozen products in the deal on 25 August, and 181 in petcare, accounting for 7.2% and 4.3% of its Nectar range respectively. Tesco, meanwhile, offered 313 deals in the baby category (5.3%), 554 in home & entertainment (9.4%) and 655 in household (11.1%).
There is some overlap between the schemes: there are more than 900 products where Clubcard and Nectar go head to head. Of these, the Clubcard again wins out, and is cheapest on 317 products. Sainsbury’s beats Tesco on half that number, at 146 products.
The Clubcard is more familiar with shoppers than Nectar prices. According to data from a Savvy shopper panel of 1,000 shoppers in June 2023, 77% of shoppers have participated in Clubcard pricing in the past three months vs 43% for Nectar.
Catherine Shuttleworth, CEO of Savvy, says Clubcard is the biggest power player in the grocery loyalty market. “It has universal appeal across all shopper groups and is becoming adopted universally.”
But Sainsbury’s is starting to gain some ground, she adds. “The challenge for Sainsbury’s, especially in the short to medium term, is that secondary and less regular shoppers who are not tied to the scheme may choose to opt out of promotions and spend elsewhere.”
Shore Capital analyst Clive Black agrees that Sainsbury’s is rapidly catching up.
“In terms of loyalty mechanics, Sainsbury’s has undoubtedly executed Nectar prices very well, and if there was a gap between Sainsbury’s and Tesco, post Nectar that has definitely narrowed.
He believes there will not be a “huge amount of switching between Tesco’s and Sainsbury’s on this front because the net benefits are relatively modest”.
“In the big scheme of things they’re pretty close to each other,” Black adds.
Tesco chief customer officer Alessandra Bellini says: “Tesco Clubcard unlocks the best value from Tesco, with customers able to save £351 a year on their shopping thanks to the thousands of weekly savings to be made through Clubcard Prices.”
“We want everyone to love their Tesco Clubcard and almost 21 million UK households can already take advantage of all the benefits.”
A Sainsbury’s Nectar spokesperson said: “We are acutely aware of the pressures facing millions of households right now and our number one priority continues to be doing all we can to keep prices low for our customers. Since its launch, Nectar Prices has rolled out across on over 5,000 products across all categories, including household products, bakery, ready meals, fruit and vegetables, dairy, meat, fish and poultry, pet food, confectionary and frozen.
“It has exceeded expectations and customers have saved over £244 million and we continue to grow and develop the offer for our customers.”
Published in The Grocer, 6 September 2023