Sainsbury’s is to revamp its popular Nectar card scheme in a move that will see loyal and frequent customers rewarded with the greatest number of points.
Shoppers will no longer simply receive one point per £1 spent in store: instead, they will be rewarded based not just on spend, but how frequently and how long they’ve been shopping with the retailer.
Sainsbury’s is trialling the revamp in the Isle of Wight from today.
The supermarket giant bought the Nectar business in February for £60million from Canadian firm Aimia. It says around 19million people are signed up to the loyalty scheme which started in 2002.
Loyalty: Supermarket giant bought Nectar in February and has wasted no time revamping the rewards on offer
Of these, 40,000 are in the Isle of Wight – and the trial, which has no time limit, will help it shape changes to then roll out elsewhere.
It says the move will reward customers for their loyalty while ‘ensuring a truly personalised experience’ and allows it to recognise a customer’s relationship across the Sainsbury’s Group.
The more loyal a customer is to the group, the more value they’ll get from the scheme, it told This is Money at its launch event in Holborn, London, on Wednesday morning.
The revamped Nectar will be digitally-led, with an app allowing customers to register their card and then scan their smartphone at the checkout, as well offering a newly designed card for those who don’t want the app.
New app: Screenshots of the new Nectar app showing how offers will be tailored to your shop
The app allows customers to choose their own offers from a curated list based on the products they buy most often.
It also offers a ‘favourites’ list, where customers can ‘star’ five items they buy frequently in the store to get better points offers.
Customers earn points on these offers and the amount of points they are rewarded depends on the customer’s loyalty to Sainsbury’s. In other words, the more someone shops at the supermarket giant, the juicier the points offers are likely to be.
This means it will no longer be simply the case of one point per £1 spent in a move that one expert says is risky.
Anika Newjoto, editor of supermarket loyalty website Shopper Points, said: ‘Dropping “one point per £1” base earning your Sainsbury’s spending and moving purely to a bonus points model is quite risky.
‘I’m not sure that people are willing to spend time studying the Nectar app before every shop to see what bonuses they can get.
‘It also does nothing to solve the biggest problem that Nectar has, which is that it does not have any aspirational redemptions.
‘Saving up 500 points just to get £2.50 off your shopping bill is not exciting or engaging.’
Customers currently get double Nectar points on their shopping if they have an insurance product with Sainsbury’s Bank. The new system will continue to offer double Nectar points. However, while this would currently mean two points per £1 spent, the new system could offer more or less than that depending on the loyalty of the customer.
Customers’ existing points will be safe and also worth the same. There are no changes to the Nectar scheme at other partners for now and it wouldn’t speculate on the future of its partners.
Helen Hunter, director of innovation at Sainsbury’s, said: ‘We are excited to be trialling this new Nectar scheme which gives more rewards to our loyal customers.
TESCO AND WAITROSE CHANGES
Earlier in the year, Waitrose ended its pick your own offers part of its loyalty scheme stating that customers found it too confusing.
The myWaitrose scheme allowed shoppers to pick 10 core items to then save 20 per cent on in store and online.
Meanwhile, Tesco tried to tinker with its Clubcard rewards scheme.
The supermarket announced that the value of some of its reward vouchers was changing immediately, from four times their face value to three times.
Shoppers collect points for money spent at Tesco which can be turned into vouchers for days out or restaurant meals.
It faced such a backlash that it agreed to delay the change until June to give people more time to spend them.
‘By giving them the option to choose the products on which they earn Nectar and awarding points based on loyalty, we’ll be able to show our most valuable customers how important they are to us.
‘We’ll be actively listening to customers during the trial so that we can shape new Nectar as we learn.’
The Isle of Wight trial will run indefinitely and Sainsbury’s will be using insights from the trial to shape the future of the Nectar scheme.
It told This is Money that loading the offers onto the app comes as many customers believe having a combination of plastic and paper is fiddly.
It says that it is revamping the scheme at its supermarket as more shoppers are now promiscuous when choosing where they shop – and it wants to encourage loyalty at a time when discounters, such as Aldi and Lidl, continue to eat into market share.
Shopping habits are monitored by Nectar to tailor offers to customers – it says many people enter a shop with a small list, but a typical store has 36,000 items.
It wants to predict what is on that list to offer better rewards and encourage loyalty.
For those who are not keen on the app, offers will be e-mailed weekly to customers who can then choose to load them onto the card.
It says it will also have a customer helpline for those who do not wish to use the internet or the app.
In terms of privacy, it says the app makes clear that shopping habits will be tracked – but information is never ‘flogged’ to third parties.