The rate of earning Nectar points at Sainbury’s supermarkets will be halved early next year and with supermarkets under renewed pressure, this is sadly also a word of caution for customers of cash strapped Tesco.
From 11th April 2015 customers will now be able to earn 1 Nectar point per pound they spend, rather than the current 2 per £1 spent. Additionally the extra nectar point for each bag they bring and reuse will also be stopped.
Nectar points have long been much derided in popular culture – with jokes regularly cropping up about how many would be need to earn a reward.
Personally I think a lot of that derision has been simply due to the low value of each nectar point itself – rather than the merits of the scheme overall.
You currently earn 2 per £1 in Sainbury’s – and they have a straightforward redeemable value of 0.5p each, so you are clearly getting (as a minimum) 1% back on your spend. Compare this with Tesco clubcard points which have a base earning of 1 per £1 spent in Tesco and a straightforward redeemable value of 1p each in store.
In both cases (currently) you are earning 1p per £1, but a Nectar point itself has a lower ‘face value’ as a loyalty point compared with a Tesco clubcard point – and this is an unfortunate image to project.
Of course having a low face value for each Nectar point has also helped the scheme in other areas in environments where a 1% credit back on the spend could not be afforded and without requiring either fractional points or needing very higher spend unit multipliers (i.e. 1 per £8 etc)
And remember Nectar is not owned by Sainbury’s but by Aeroplan – the spun off Canadian loyalty currency scheme used by AirCanada! (They also operate a separate ‘Nectar’ scheme in Italy.) So the Nectar programme not only needs to be viable and lucrative for Sainbury’s and other participant users of the scheme, it also needs to generate profits for the scheme owners.
This is not the case with Tesco who still own clubcard themselves and run it in house. The question is how likely are Tesco to adjust things in their much valued Clubcard scheme?
It is certainly possible. While Tesco do derive great intelligence and value from clubcard, it is not likely that people would simply stop using it if the rate was halved. And if Sainsburys have halved their rate already the defections should be less.
Back in 2009 Tesco briefly began offering double clubcard points in store (2 per £), while conversion rates for using the points were similarly raised (to effectively halve the value of each point), but they retreated from this position.
Sainsburys say they want to use the points saved to do more targeted promotions, which is something which they have not really engaged in that much and could do well from.
If Tesco adjusted clubcard, which would most likely be by increasing conversion and redemption rates, they would probably route the cost saving into price cuts, given it is prices where they are apparently/supposedly currently hurting against other retailers.
It is not all doom and gloom:
The Nectar redemption rates have not changed, if you are points collector the chance for more bonuses and special promotions could up your earning and you can still get them from the final page of expedia bookings, train tickets from First group companies, and using their eStores from easyJet flights – Nectar remains the de-facto effective loyalty and cashback scheme for easyJet flights.
Finally some other Nectar bits:
Everyone who swipes their nectar card this weekend when they spend £20 in store will get a voucher – anything from 50 points (25p) to 5,000 points (£25).
You will also get entered into the Nectar millionaire draw where one person wins 1m Nectar points (value £5,000).
Daily play, spin for 50,000 points (£250):
Other offers under the thanks a million promotion:
… also on the main nectar site.