Supercharged loyalty: Tesco’s Clubcard Plus aims to drive store footfall

Tesco’s Clubcard Plus scheme launches on 8th November, introducing ‘supercharged loyalty’ that requires shoppers to pay a monthly subscription fee of £7.99 before seeing a range of benefits.

Tesco’s Chief Customer Officer, Allesandra Bellini, said: “New Clubcard Plus is a breakthrough innovation giving customers even more ways to get the best value while shopping at Tesco, for their everyday essentials, weekly shops, Mobile and Banking.”

Tesco says subscribers could save up to £400 a year with the new Clubcard – so long as they commit to being a true Tesco regular. The scheme will be run using a card or an app.

However pundits are questioning whether Tesco’s new Clubcard scheme is really worth £96 a year. Manchester Evening News has calculated that, in order to break even, a family would need to spend £80 a month over two shops per month, every month for a year.

Tesco has confirmed that its normal Clubcard system will remain the same and free to use, and only those using the Clubcard Plus will be required to pay the monthly subscription fee.

What are the rewards of Clubcard Plus?

The card will give shoppers 10% off two big shops up to the value of £200 every month, but this spend must be in store, rather than online. That means a maximum saving of £40 for each shop.  As the main perk of Clubcard Plus, this shows that Tesco is using the scheme to drive footfall into its supermarkets – where profit margins per shop tend to be higher than those generated from online grocery orders.

Subscribers also get 10% off selected Tesco brands in-store – including F&F, Fred & Flo, Go Cook, Tesco Pet, Carousel and Fox & Ivy, ‘double data’ from Tesco Mobile and can apply for a Tesco Bank credit card with no foreign exchange fees abroad.

What will Tesco achieve?

Tesco says that in a trial with almost 75,000 of its staff, average basket spend in stores increased by an average of £8.68. Subscribers also engaged with an average of two of Tesco’s businesses, compared to 1.5 prior to joining the subscription service.

A core objective is securing large weekly shopping trips in stores – something the big four grocers can no longer take for granted.

It’s hoped that a substantial take-up of the new scheme will give Tesco insights into shopper behaviour through customer and sales data gathered. Loyalty data will help Tesco improve the planning and execution of offers that will tie customers to the brand in areas of their life beyond the weekly grocery shop.

More than 19m users have signed up to be Clubcard members since its launch in 1995, and the scheme has been credited with boosting the supermarket from the UK’s second biggest grocer to the number one spot.

Sainsbury’s Nectar card app is supercharging loyalty too

Tesco’s loyalty innovation comes as retailers attempt to redefine their loyalty programmes to better align to consumer spending habits. For the leading British supermarkets, the rise of Lidl and Aldi has impacted market share, and winning back customer loyalty is high on their agendas.

Sainsbury’s has just revamped its Nectar scheme encouraging cardholders to switch to a digital version managed through a new-look smartphone app.

Looking ahead, both Tesco and Sainsbury’s have ample opportunities to steer their loyalty programmes in interesting new directions – possibly going down the ‘Prime’ route of tying in free online delivery for committed subscribers, and adding new services and additional partners to make the offer ever more appealing.

That said, critics are quick to point out that the discounters will be hard to beat, no matter how innovative loyalty schemes become. The cost implications of developing, marketing and managing loyalty card schemes should also be carefully considered.

 

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