Consumer NZ Warns Supermarket Shoppers: Beware Of Loyalty Lure

Consumer NZ is warning New Zealanders to be wary of supermarket loyalty schemes, with recent research showing yet again they don’t always offer the most competitive price.

Consumer compared products marked with loyalty discounts at Woolworths and New World stores with prices for the same products at Pak’nSave (which does not require customers to be members to get cheaper prices). They found some products marked as loyalty “specials” could be purchased for a cheaper price elsewhere.

“We question the value of supermarket loyalty cards,” says Gemma Rasmussen, head of research and advocacy at Consumer.

“If you’re providing your local supermarket with your personal data, purchase history and shopping habits, you should be able to trust that you’re getting a great discount in return,” says Rasmussen.

“The supermarkets are working very hard to make reward programmes appealing. The introduction of 'boosted products' at Woolworths really gamifies the shopping experience and encourages people to chase points.

“Ultimately what we want to see is fair prices for everyone.”

Lacklustre loyalty discounts

This March, Woolworths Everyday Rewards members in Kāpiti paid $14 for a 4kg box of Fab Laundry Detergent. The same product could have been purchased at Pak’nSave Kāpiti for $10.99.

That same week in Porirua, Consumer found a 180g block of Cadbury Dream Chocolate was $4 for Woolworths Everyday Rewards members and $3.99 for New World customers. But if you went to the local Pak’nSave it was a bargain $2.50. Woolworths shoppers without a membership paid a premium price of $5.

Back in Kāpiti, a 750ml bottle of Powerade was $3 for Everyday Rewards members and $3.49 for New World Clubcard holders. Yet Kāpiti Pak’nSave customers could get the same product for $2.69.

A 2kg container of Finish Dishwasher Powder was priced at $12 for Everyday Reward members, and $13.99 for Clubcard members. But again, Pak’nSave beat those member prices, with the product selling for $9.99.

Holding you loyal

Supermarkets aim to keep shoppers loyal, and with financial stress around food at a national high, Consumer's research indicates people are more susceptible to a “deal”. It's very hard to tell instore or online whether deals are genuine.

"We think two-tier pricing in supermarkets ramps up the pressure on shoppers to sign up to loyalty schemes.

“As an example, a block of butter on display at Woolworths recently had a 40% price difference, offered at $4.60 for members or $7.69 for non-members. Paying that much more for a product can be hard to stomach, so the temptation to hand over your data is understandable.”

Rasmussen says data collection is “big business” and one of the main drivers for supermarkets in offering loyalty schemes.

“The variance in pricing offered to loyalty card holders is a good reminder of how valuable information about your shopping habits, purchase history and demographic data must be to the supermarkets that collect it.”

Beware of the loyalty lure

“If you can, we encourage you to shop around and don't trust that a loyalty price equals the best price,” says Rasmussen.

“Using an app like Grocer is the best way to ensure you’re paying the cheapest price in your suburb or region.

“We understand not everyone has access to multiple supermarkets, but if finding the best price is your priority, remember - loyalty cards don’t always reward your loyalty.”

Notes:

- Prices of products marked with a loyalty special were compared across Woolworths Paraparaumu and Porirua, New World Kāpiti and Porirua, and Pak’nSave Kāpiti and Porirua in March 2024.
- Screenshots of the same products in different stores were taken on the same day.

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