A Critical Investigation of Loyalty Card Schemes in UK Supermarkets

This report critically investigates the loyalty card schemes employed by major UK supermarkets, analyzing their impact on competitiveness. The study begins with an abstract and table of contents, followed by an introduction that outlines the research aim, questions, objectives, and rationale. A literature review explores different loyalty club schemes such as those offered by Asda, Lidl, Marks & Spencer, Morrisons, and Sainsbury's. The report examines the impact of these schemes on organizational strategies and competition, including how they influence customer retention and market share. The research methodology section details the approach, including qualitative and quantitative methods, and data collection techniques. The analysis section presents findings related to the effectiveness of various loyalty programs. The report concludes with recommendations for improving loyalty schemes and suggestions for future research, including the need for a standardized customer retention reporting method and international scale studies. The report uses secondary data to evaluate the loyalty schemes, ultimately suggesting that well-operated schemes reduce competition by attracting and retaining customers.

A Critical investigation on the loyalty card
scheme in UK's top supermarkets make it
more competitive in comparison with
competitors

Abstract
The Dissertation reviews the results from the investigation of UK’s top supermarket loyalty card
schemes and analyzes the impact based on comparison of different types of supermarket from
each other after evaluating the different methods and techniques of loyalty schemes. British
supermarkets are growing in popularity everywhere. Highways in the UK around the 1950s, the
sector has grown rapidly in recent years, and recently UK supermarkets have become a strong
retail tycoon. This study addresses the knowledge gap when applying environmental standards in
the UK supermarket sector. The supermarket will also provide a deeper understanding of CSR
involvement in complex discrimination strategies. Secondary analysis is used to review corporate
social responsibility reports published by UK supermarkets and generate a mixture of qualitative
and quantitative data for review. Each supermarket is then evaluated based on the level of loyalty
schemes, with the results being the highest scored by the discount market and the lowest scored
by some UK supermarket giants based on evidence reflecting the renewal that occurred in the
UK supermarket. The market share of discount stores has been rising rapidly in recent years.
These results suggest that supermarkets that best operate and use attractive loyalty schemes get
benefit in the form of reducing competition in an open market despite providing similar services
as delivering by other competitors. Recommendations are given on how supermarkets can
improve loyalty schemes and sustainable development, the need for a standardized customer
retention reporting method, and possible future research on an international scale.

Table of Contents
Abstract............................................................................................................................................2
Title: A critical investigation on the loyalty card scheme in UK’s top supermarket makes it more
competitive in comparison with the competitors.............................................................................5
1. INTRODUCTION.......................................................................................................................5
Research Aim:........................................................................................................................5
Research Questions:...............................................................................................................5
Research objectives................................................................................................................6
Rationale of the research........................................................................................................7
2. LITERATURE REVIEW............................................................................................................8
2.1 Different loyalty clubs scheme of UK top supermarket...................................................8
2.2 Impact of those loyalty club schemes on organisation strategies with competitor..........9
2.3 To visualise how the loyalty club schemes changes organisation strategies with
competition...........................................................................................................................10
2.4 To recommend new and improved strategies for loyalty schemes for UK top supermarket.
..............................................................................................................................................12
Conclusion.....................................................................................................................................14
3. Research Methodology..............................................................................................................15
3.1 Introduction....................................................................................................................15
3.2 Research methodologies.................................................................................................15
3.3 Research approach..........................................................................................................17
3.4 Quantitative and Qualitative approach...........................................................................17
3.5 Data collection methods.................................................................................................18
4. Analysis......................................................................................................................................19
4.1 Introduction....................................................................................................................19
4.2 Findings..........................................................................................................................19
Conclusion.....................................................................................................................................22
References......................................................................................................................................23

Title: A critical investigation on the loyalty card scheme in UK’s top
supermarket makes it more competitive in comparison with the
competitors.
1. INTRODUCTION
In current business environment, there are different factor which have to be used by
business firm in order to meet needs and perform function in effective way to meet needs and
make effective use of loyal customer. There are different sachems which are used by business
firm. These are effective to meet needs and perform function in accordance to current customer
base of firm. Loyal Customers are important for an organisation and all the businesses take
actions and make strategies to attract more customers and gain loyal customer base. A loyalty
program is a kind of marketing strategy that is designed by companies to encourage customers.
In relation to current researcher report, it is based on different supermarket firm. These are
performing number of pre-program in order to retain customer in market and perform in effective
way. ASDA, Tesco and many other firms are doing this function in order to perform loyalty
program. This repost also consist instruction on use of effective literatures and well set
secondary data. This is effective to meet needs and manage customer according to needs of
business firm. These firms are using function in order to manage roles and perform all activists
according to basic resources. These programs are beneficial for firm in meeting objectives and
performer all those work according to needs. There are different factor which have to be used in
order to meet needs and perform function in effective way. There are different roles which are
played by these schemes and manage roles according to requirement.
Research Aim:
The aim of current research is “to investigate loyalty card scheme in UK’s top supermarket
makes it more competitive in comparison with the competitors”.
Research Questions:
 What are the different loyalty clubs schemes of UK top supermarket?
 What is the impact of those loyalty club schemes on organisation strategies with
competitor?

 How loyalty club sachems changes organisation strategies with competition?
 What are new and improved strategies for loyalty schemes for UK top supermarket?
Research objectives
 To identify different loyalty clubs schemes of UK top supermarket
 To evaluate the impact of those loyalty club schemes on organisation strategies with
competitor
 To visualise the how loyalty club sachems changes organisation strategies with
competition
 TO recommend new and improved strategies for loyalty schemes for UK top
supermarket.
Overview of the research
Loyalty schemes are important factor which is related to promoting function of firm
which helps in meeting needs and performing task in effective way. This is help full in meeting
needs and performing task according to needs. These are different factors which are used under
this report and manage roles according to function. This report consist discussion about different
factor where secondary data is used to meet objectives and perform all reviews. This is helpful in
meeting needs and performing all those function which helps business firm in meeting all those
function which helps in relating employees and building effective function. Under this, it also
includes discussion about data which is used by researcher to perform in effective way and meet
fulfil research objectives. Under this different literature will be used to review and manage data
which can be used to perform function and gain advantages according to needs. This is also
related to getting function which will helps in meeting all those reasons which are used to gain
information about different factor. This research also consist discussion about different factor
which will use to manage all data and perform function in effective way. There are various there
are different factors under this research report which are considered in order to ascertain the
objectives and perform the function and effectively. The research is placed on the incentive

programs as a loyalty programs which are started by different supermarket giants and order to
attract the customers this help these organisations in achieving better results. There are different
factors which will help this organisation under this and will be identified by the researcher in
order to perform the research in effective manner. Research also consists appropriate data
analysis program which include various ethical concerns as well as effective use of data in order
to achieve better results. There are various factors under the data collection and methodologies
which are used to maintain the research article and certain for different data methods.
Rationale of the research
Rational can be defined as a purpose of a research which is directly associated with the
uncertainty and appropriate bowl of the research (Mohajan, 2018). It is identified that there are a
number of problems which are faced by the supermarket organisation in their loyalty schemes.
These loyalty card schemes are continuously impacting negatively on the image of organisation
due to non fulfilment of different functions as well as promises of the organisation towards the
customers (Ramanathan, Subramanian and Vijaygopal, 2017). In order to achieve better results
and perform the function in an effective manner there are different factors which has to be
covered under the research to identify the reasons behind failure of these incentive schemes. It is
also essential to identify the different factors and the reason of failure of these schemes as well as
utilising the scales in appropriate manner. It is essential for every supermarket organisation to
identify and perform the function in order to achieve better results from their loyalty schemes.
This is because this loyalty card scheme will help in boosting the profitability as well as
maintaining the customer for a longer period of time. According to Ramanathan, Subramanian
and Vijaygopal, the major change of organisation performance as well as importance of these
loyalty program is related to retaining the customers for a longer period of time so that form can
take decisions accordingly it is also identified that this will help the firm in maintaining an
appropriate position within the market. There are different factors which are considered
additional to the research which are essential for the organisation to know the main reason
behind failure of these schemes. The reason is related to lack of management interest as well as
improper management of loyalty card schemes.

2. LITERATURE REVIEW
2.1 Different loyalty clubs scheme of UK top supermarket
In the views of Ellie Simmonds, supermarket market loyalty schemes are the useful way
to save money. Although, there are various loyalty schemes of supermarket are available. It is
little bit tricky that which one is right for the company. There are various loyalty schemes of
different supermarkets. These are Asda, Lidl, Marks and Spencer, Morrisons and Sainsbury.
Asda is the largest supermarket in UK. Asda allows the customers to earn reward points on
home-ware and clothes purchases. It has George reward offers on every purchase from George
product line. These points will helps the customers in getting discounts on future shopping of
clothes etc. however, these points can only be earn on online shopping and cannot be earn on
groceries shopping. Then in the case of Lidl organisation, they made Lidl Plus which is the
discounter's first foray into the world of loyalty schemes and it has comes in the form of
company application. Customers need to download the app and then register on that. Then there
will be a host of coupons that should be activate. This includes 20% off French cheese and 15%
off Gelatelli ice cream. Once a person has activated a coupon, then he is liable to use that offer
before the expiry of that time. To use this coupon, person needs to scan digital card in the
application (Lloyd, Cheshire and Squires, 2018).
According to Hupfeld and Speed (2017), Marks & Spencer introduce its SPARKS the
loyalty scheme in July 20 after the old confusing version. In this scheme, shopper can swipe their
sparks card for free shopping but every week only one lucky shopper can get free shopping.
With this card M&S offers their customers for free shopping and some special gifts, it will
completely based on their shopping. M&S donate to charity on the behalf of their customers
shopping when they shop every time from the store or online. It can be said that, sparks scheme
of marks and Spencer is new for its customers and better from the old one.
Morrisons is free to sign up loyalty schemes, offers by Morrisons. Customers can earn
five points, for spending £1 at Morrisons cafes online and in stores and also for every litre of
fuel. In this scheme, worth of each point is 0.1p so, if a customer has £6 vouchers, than it is
equal to 6,000 points. Company gives additions points to its customer for selected promotions. It
can be said that it is a beneficial scheme for Morrisons shoppers (Umar, 2020).

Along with this, TESCO offers two club card schemes for their shoppers, in which first is
standard and free Tesco club card and the other is Tesco bank purchase card. For standard card
company offers to spent £1 to collect 1 point in store or online. For Tesco bank purchase Card
Company offers its customers to spent £4 in Tesco and £8 spent elsewhere to earn one point. In
this way, Tesco club card plus, which offers their customers to take monthly subscription service
to get additional discount (Marjan et al, 2020).
According to Shen and Pena-Mora (2018) Sainsbury's is also a part of loyalty club
schemes. Company introduce Nectar card for the customers, in which shoppers get one point for
spent their £1 online or in store. If shoppers want extra points, so they can collect Sainsbury's
bank dual offer credit card. These offers are for limited time period. Sainsbury's also introducing
its online mobile app, so shoppers can view these offers easily from home and scan through
mobile application. The main objects of companies behind these schemes are to encourage
customers to spent more for collecting the points.
MyWaitorse is a loyalty scheme of Waitrose for its shoppers, in these customers and
others don’t have to pay anything to join this scheme. This is not based on collecting points, it is
completely based on discount and freebies. Waitrose offers to get free coffee or tea for each visit
of their cardholders. This card is useful and worthy only when Waitrose store is nearby its
customers (Butterfield, Newing and Heppenstall, 2020).
The loyalty schemes effectively work on these stores, this scheme successfully effect and
increase the purchasing power of shoppers. These schemes are mostly used to encourage
shoppers for shopping (Butkeviciute, 2017).
2.2 Impact of those loyalty club schemes on organisation strategies with competitor
Loyalty club schemes increase the sales of an organisation through repeating purchasing
behaviour of customer. According to Hassan, Parvez and Ekiz (2019) loyalty defines as trust, of
a person in your product, service or scheme. It can be said that loyalty club is tool of a company
to motivate customers to buy their products again and again. Behind this, main object of
company is to establish purchasing habits in customers. This will help company to maintain
stable with their present competition level. These schemes encourage and attract a wide range of
customers in positive manner. In this way, loyalty schemes are an essential element for the
present competitive market. Most of the organisations adopted these schemes for actually survive
in current world of competition. According to the author it is seen that large organisation have

more effective loyalty programmes and schemes that attracts more customers towards their brand
and company.
Loyalty programmes are becoming most important for every organisation because they
are important for the relationship of customer and company. There are various industries that are
using numerous loyalty programmes in their company. In addition, when product category
demand is rigid then the impact of loyalty programmes decreases the market place becomes more
saturated and with competitive programmes. According to Hassan, Parvez and Ekiz (2019) the
effect of customer loyalty schemes on the supermarket and on their competitors are interrelated.
Loyalty programmes can help an industry in gaining competitive advantage over the substitute
products outside an industry. Effects of loyalty programmes have led to supermarket that they
can tract the customers buying pattern and understand better their buying motives. Company is
agreed to customer is loyalty cards and having a supermarket being able to segment a market.
This will helps the company to customize its promotions, prices and services are charged
according to them discount they received and leading to the reduction in market cost. And
loyalty programmes also helps the customers in quick deliver and providing multiple services to
the customers by providing discounts to them. These loyalty programmes helps all the top
supermarkets to acquire large customer base in all over the market. This also provides reduction
in marketing and IT cost (Champion, 2019). It also facilitates the implementation of market
recalls where ever is necessary. Loyalty schemes provide customers rewards points that help
customers in getting discounts and offer on their future purchase. This becomes more effective as
customers then recommend this to their family members and friends. By this company will
increase its growth and customer satisfaction. This will results in increasing profitability and
revenues. Loyal customers can able to get more offers and discounts. Loyalty programmes helps
the supermarket in competing price with other competitors in the market. This helps them in
retaining customers for long time. This will increase company profitability and revenues. During
this Covid pandemic customer has done more online shopping which provides them more
rewards and offers or discounts on their shopping. They also refer to their relatives and friends
(Son, Han and Park, 2020).
2.3 To visualise how the loyalty club schemes changes organisation strategies with competition
Loyalty club schemes is launched as a part of marketing gimmick designed or formulated
to lure more customers and to retain old customers and encourage them to continue shopping or

using services of business or organisation associated with that program. Basically in this program
customers are provided with a card which is record of points they own allotted to them when
they purchased any product or used services of business associated with the program. The
customer can use those points for getting discounts on current purchases as well as on future
purchases. A particular individual in UK owns approximately 17 loyalty card in their digital
wallets. Following are the strategies related to loyalty club program.
Organisation can have enough information to better understand existing customer
preferences and their community group:- Gaining enough information related to customers taste,
preferences, their age group and society they belongs to will definitely provides company clear
vision related to how to retain existing customer by alluring them with overwhelming discounts
offer and voucher and also to take future steps related to taking growth step in market. Loyalty
club program is used differently in different sectors. For instance Tesco which is among the
largest grocery and general merchandise company worldwide uses loyalty cards so that they can
better retain their existing customers and also to allure their new customers. They provides
varied discount on clothing and online purchased groceries which can be redeemed by the points
allotted to them on every purchase. Whereas in financial service sector company uses loyalty
card as a base of insights and information so that they can accurately understand customer
choices, their short term and long term goals, their financial needs and wants and use these
insights for reaching more customers (Zielke and Komor, 2020).
Loyalty program should be open nature in nature so that it can stand out from the crowd
and also acceptable by wide range of customers: - openness here refers to programs adaptability
to work with others. Program should not be in rigid in nature rather it should be dynamic in
nature which can also work with others who are also preferable by crowd. Now a day’s all
loyalty program related to particular business is already becoming more open in nature which is
derived as per customer demand. For instance we can understand this with the example of
Amazon. Amazon's program is already working with many top business organisation i.e. Paytm,
Google pay and many others. On using Google pay or any other digital wallet for transferring
money to your peer’s customer can receive Amazon vouchers which they can use to get
discounts on future purchase on Amazon. In this way they attracting more and more customers
working together and also earning enough profits for each organisation (Alshurideh et al, 2020).

Loyalty club program should be based on modules which can enhance customer service: -
Loyalty club program which are based on modules end up being more effective and intends to
help customer to match things as per their preferences. Modularity is also necessary and very
important if loyalty programs are based on multiple channels which can be mobile application,
online or physical store. Also this will also help customer to not choose same set of services for
instance we can take airline frequent flyer program where a person who reached gold or platinum
level can easily differentiate between the prizes offered at basic level.
The program should be based on simple rules :- A program with a simple set of rules are
easily understandable by customers and these type of frameworks enhances customer
experiences with the program making program and company trustworthy in eyes of customer.
For instance we can take airline frequent flyer program where every time a customer try to
redeem miles but unable to do so because of lack of seats per mileage. By this they get frustrated
which declines programs trust and company's image in the eyes of customer.
Management of relationship with customer so that they can easily reward their customer: -
There should be alignment between loyalty club program goals and organisational goal which is
to build and manage customer relationship so that they can earn more from customer loyalty. For
doing relationship management company should also look after real time relationship rather than
only looking for mail and billing cycle relationship.
2.4 To recommend new and improved strategies for loyalty schemes for UK top supermarket.
An improved loyal club schemes can work magically for any company in retention of their old
customers and also to allure new customers in market. Following are the few recommendations
that can help to improve strategies for loyalty schemes.
 Offering incentives on sign up which can also be referred as rewards for joining to new
customers: - For any business growth and survival it has to look after new customers in
the market. Using loyalty club programs to allure new customers by providing them
incentive can be considered as great initiative (Hupfeld and Speed, 2017).
 Keeping it simple. Gathering information which is usable rather than asking plethora of
personal questions: - Asking too much of personal information might make customer
frustrated leading them not to sign in loyalty program. Also if all those information is not
relevant as per company perspective then there is no point of asking for all these
questions (Hutchinson et al, 2015).