Ep 105 - The price of loyalty

Grocery price inflation is increasing even though 97% of shoppers have a loyalty card, which is supposed cut some prices by up to 50%. It does not seem to make sense.

The supermarkets have persuaded us that the cards save us lots of money so that people who forget to take their cards with them when they shop believe they have missed out on big reductions.

We have to remember that supermarkets are making enormous profits. Just a week ago Tesco announced that its sales in the UK increased by 5.1% to £12.3 billion in the 13 weeks to May 24 and its market share in the UK has risen to 28 %.

The big losers are shoppers who do not have a loyalty card. Some are deliberately excluded by supermarkets because they do not have a smart phone. Supermarkets have chosen not to allow offline membership or under-18 shoppers to benefit from the discounts.

Now that shoppers believe that loyalty cards are a good thing it seems that the loyalty prices are less generous than they were when they were launched with lots of big television advertisements. We now have fewer advertisements and fewer discounts. But shoppers still believe in loyalty cards.

We can save more by avoiding big brands that cost lots more than own-brands or discounted store products. But we also have to make sure we are not panicked into buying items because they have a special price that week. Yo-yo pricing means that we can work out the pattern of the reductions and buy items when they are cheaper again.

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