Co-op overhauls loyalty scheme to focus exclusively on member pricing

Co-op is updating its rewards scheme so it is based entirely on exclusive deals and discounts for members, which it claims is “financially much more rewarding” than its current loyalty programme.

The retailer’s existing scheme allows Co-op members to earn 2p for every £1 they spend on particular branded products and services, which is paid into a “digital wallet”. In April last year, it introduced member pricing, offering exclusive discounts for those signed up to its membership scheme.

The retailer has since analysed the financial benefits of both offers, which it says reveals member pricing yields a 90% increase in rewards. As a result, it is changing the scheme to focus solely on member pricing.

From 24 January, Co-op will no longer offer its members the chance to earn rewards and will instead “significantly increase” the number of member prices and deals across its business.

Why retailers are using loyalty cards as a promotional paywall

Its members will also benefit from price reductions on branded and own-label foods for the first time, and have access to a choice of two personalised offers each week.

Co-op has committed that the community causes it funds will continue to get similar levels of investment, despite the change to the membership scheme.

Exclusive discounts for loyalty scheme members have become the most prominent way for UK supermarkets to reward shoppers. Tesco introduced member pricing back in 2020. It has expanded the scheme, even introducing a TV ad campaign under ‘The Power to Lower Prices’ platform that focuses on its Clubcard Prices scheme.

Last year, Sainsbury’s introduced a similar scheme to Tesco’s through Nectar Prices. Morrisons also introduced exclusive deals for its loyalty scheme members in May 2023. Outside of the grocery sector, Boots, Superdrug and H&M all have exclusive discounts for their loyalty members.

Competition watchdog to open investigation into supermarket loyalty schemes

It has been the supermarket sector where exclusive loyalty member discounts have attracted the most attention. In November, the Competition and Markets Authority (CMA) said it would be launching an investigation into such schemes, as part of its ongoing work looking into increasing food prices.

Beginning this month, it will look into whether supermarket loyalty schemes are detrimental to the majority of consumers, or to competition.

The CMA chief executive Sarah Cardell said the organisation had noted the increase in use of loyalty scheme pricing, meaning that price promotions are only available to those who sign up to the scheme.

“This raises a number of questions about the impact of loyalty scheme pricing on consumers and competition,” she said.

The investigation into loyalty scheme pricing is ongoing.