Shopping loyalty cards: Is it really worth sharing your intimate details with a supermarket?

Before the cost of living crisis hit, the Clubcard loyalty scheme run by Tesco didn’t really stand out from the pack but, with prices spiking up and down the supply chain in the wake of Russia’s invasion of Ukraine in 2022, things changed almost overnight.

In order to save itself a few bob, Tesco removed the deals and promotions on offer to everyone and targeted them instead only at members of its loyalty scheme.

The savings that could be made through scanning a Clubcard were substantial with the financial impact of leaving the card at home painful – sometimes amounting to in excess of €20 on a €100 shop.

It created a two-tiered shopping experience with members of its loyalty scheme benefiting to the detriment of those who had not signed up but that wasn’t the only way it may have worked against consumers.

Last month, Tesco was found guilty of breaking the law in connection with how it had displayed the price of products it was selling on promotion and ordered to pay €1,000 to a charity as well as covering the legal costs of the consumer watchdog that took the case.

The Competition and Consumer Protection Commission carried out an investigation on foot of complaints of shoppers and found that the retailers had broken the law by failing to include unit pricing on Clubcard promotional shelf-edge labels.

Tesco subsequently rectified the issue.

It was a minor blip in a scheme which has for decades led the way for Irish shoppers even if it wasn’t the first to the loyalty card party in Ireland. Superquinn launched a loyalty scheme over 30 years ago after which Tesco rolled out its own scheme followed by Dunnes. And then Supervalu and Ikea and TK Maxx and Marks & Spencer and Eason and Brown Thomas and Arnotts and countless coffee shops, bookshops and gyms.

More recently Circle K and Revolut have joined the loyalty party.

If you had to carry cards for all the loyalty schemes you could potentially join you’d need six wallets and would have no room in them for anything else – although thankfully most schemes are virtual now so you only need an app or your phone number to be rewarded for your loyalty.

And what do the retailers get in return?

Information. The cards quietly mine data about your shopping and spending habits and a clued in supermarket can probably work out – if it is so inclined – what you buy and when.

It can deduce your age and marital status and whether or not you have kids and how many. It obviously knows where you live and where you bank and what credit cards you have but also the most intimate details of your lifestyle and personal care routine. Your supermarket probably has a clearer idea of how much alcohol you consume than your doctor. Your supermarket probably has a much clearer idea of how much alcohol you consume than you do.

But does it really store all this information and if so why? For starters it can sell the information to third parties for a fair chunk of cash but it has more potential than that.

It’s hard to say for sure just how advanced the systems are but it seems obvious that with developments in AI, the cost of parsing all the data a shop can collect on you is falling and that will benefit retailers who have long been aware that we are creatures of habit.

We buy the same tea, milk, breakfast cereal, shaving gel and all the rest because we know what we like and there are very few points in a person’s life when habits shift – when we leave home, when we get married, when we buy a house when we have children – that kind of thing.

To give you a sense of just how powerful loyalty scheme information can be we need to revisit a story we have told before.

In the 1980s, Alan Andreasen, a UCLA professor at the time, started looking at the purchases people made focusing on the basics found in most shopping trolley.

He noted that after people get married, they are more likely to buy a different brand of coffee. When a couple moves into a new house, they are more inclined to buy a different kind of breakfast cereal. When a couple divorces, they are most likely to buy new beers.

The research was trying to identify moments when people are “vulnerable to intervention by marketers” so shoppers could be nudged in a certain way at a certain time. One of the biggest moments is when a child is born.

From Alan Andreasen we move on to Andrew Pole.

He was an analyst with Target, the US retailing giant and was charged with using the data hoovered up by Target’s store card to work out when women were pregnant so the store might more easily attract the attention of women in their second trimester and make them loyal customers.

He worked out that a woman who suddenly starts buying unscented body lotions or supplements such as calcium, magnesium and zinc was most likely pregnant and then he drew up a list of 25 products which, if bought in certain amounts and in a certain sequence, could tell Target if a shopper was pregnant and even her due date.

Terrifying, right?

There’s more.

In his book, The Power of Habit, US journalist Charles Duhigg tells the story of a man who went into a branch of Target near Minneapolis demanding to know why his high school-going daughter was suddenly getting coupons for baby clothes and cribs. It subsequently emerged that his daughter was pregnant and the first people to know about it were Target.

Now, we can’t for a second imagine your local coffee shop is using the stamps it puts on your coffee cards to work out anything remotely like that and we are sceptical as to whether Ireland’s big retailers are poring over the our shopping habits in such a fashion but the story illustrates what is possible and that should at least give us pause for thought next time we sign up to a loyalty scheme

At its most harmless. loyalty schemes give us the occasional discount or free coffee or book and allow retailers target us with products we might reasonably be expected to buy. They can, however also be exclusionary and cut people off from savings if they don’t sign up. And then of course there is the profit motive power imbalance. If knowledge is power, the retailers that have the most knowledge have the most power and they can use that to make more money and shut smaller businesses out.

So, with all that in mind, here are just some of the loyalty schemes out there right now.

1. Boots Advantage Card: With this card you will get three points for every €1 spent. There are also discounts on a range of products for card holders and bonus points available when buying certain products.

2. Brown Thomas/Arnotts: You get a point for every €1 you spend and every point is worth a cent, unless you spend in excess of €5,000 a year, in which case you can earn 2 points for every euro spent. You also get extra points when buying from the Sustainable Edit range and extra points around your birthday.

3. Coffee cards: Coffee chains are where loyalty schemes are 10 a penny but not all cards are equal. For every €1 you spend in Starbucks, you get three stars. When you have 150 stars – or spent €50 – you get a free drink. If you get to 450 stars you qualify for a birthday drink. Butlers have what to us looks like a better card – it is certainly simpler. Every tenth drink is free. People who sign up for the Insomnia card also get their tenth drink on the house as well as “birthday treats”.

4. Ikea Family card: You won’t get points but you will get a free cuppa if you visit during the week as well as damage cover if something breaks while you are bringing it home or assembling it. Card holders can also avail of special discounts and get invites to workshops and the like.

5. Dunnes Stores Value Card: There is the €10-off-€50 voucher scheme which sees you get a voucher for a tenner if you spend €50 but it that has to be used within a 10 day period. It also has a card which earns you a point for every €1 you spend with each point worth a single cent. Once at least 200 points are earned on the card within a specified collection period, you will receive vouchers sent to customers each Spring, Summer and Christmas.

6. Tesco’s Club Card: You get one point for every €1 you spend, and once you have a certain number of points accumulated – in this case 150 – you will get vouchers. Then there is the Boost which allows you to increase the value of your voucher by as much as 300 per cent if you spend it with the supermarket’s partners.

7. SuperValu Real Rewards: Members are promised weekly savings with vouchers and coupons and special deals and discounts.

8. Lidl Plus: No vouchers but certain products are discounted for loyalty scheme members.

9. Revolut RevPoints: A new entrant to the market sees account holders earn points from their everyday spending to be used for various benefits and discounts. It is tiered so the more you pay to Revolut, the more points you can earn. RevPoints can be transferred to airline loyalty schemes or for discounts on holiday accommodation or for discounts from businesses who have signed up.

10, Circle K: Its new Extra programme will replace its Play or Park scheme and will operate on a tiered system based on how much people spend. Level 1 members get 1c off a litre of fuel with every purchase, Level 2 members get 2c off, and Level 3 members get 3c off. People can also earn points when shopping in-store and for every euro spent, they can get 3 points with each point worth a cent.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.