Last week Sainsbury’s launched Nectar prices, supported by a substantial marketing drive in-store and online.
Similar to Tesco’s Clubcard Prices, Nectar Prices gives Nectar card holders exclusive access to discounts. There is a big focus on brands and new feature and display opportunities. Nectar Prices is not available at the retailer’s Local convenience stores.
Sainsbury’s will be keen to replicate the success of Clubcard Prices, which has worked well for its biggest competitor. Since launching Clubcard Prices, Tesco has seen use of its loyalty card increase and its value perceptions relative to the competition improve steadily, according to our research.
Increasing participation of Nectar use isn’t just good for driving loyalty, it will also provide better data, deeper shopper insight and the ability to more accurately tailor promotions to specific shopper audiences in the future.
One of the benefits of mechanics like Nectar Prices is they add a little ‘thrill of the chase’ to the shopping experience. While EDLP has its benefits, deep discounts excite shoppers, encouraging brand switching and broaden basket repertoire.
The risk for Sainsbury’s is complexity, leading to a confusing value message.
Nectar Prices comes in addition to personalised weekly offers that Nectar app users already receive. There is also ‘Your Nectar Prices’ – personalised discounts exclusively for Sainsbury’s SmartShop customers.
Another potential pitfall of the initiative is it’s untargeted approach. Shoppers, especially those aged under 30, continuously tell us in our shopper research that they want tailored offers that are completely relevant to them.
A final point worth mentioning is that Nectar Prices (as well as Clubcard Prices and Co-op Member Prices) seems to represent a broader shift back towards high-low pricing. This makes demand planning more tricky, puts pressure on the supply chain and can lead to availability problems, if not managed carefully. Positively, of course, it provides fresh ways to talk about price and value, while putting clear blue water between them and Aldi &Lidl.
If you want to read our full report including images and stats from our Shopper Panel research, please get in touch.