The Competition and Markets Authority today published its cost-of-living report which cleared supermarkets of ever using misleading loyalty promotions, and recognised the “effective competition” between retailers was keeping prices as low as possible for customers.
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GLOThe Competition and Markets Authority (CMA) has disclosed its initial findings from an ongoing review of loyalty pricing adopted by major supermarkets in recent years.
The investigation, which began in January, aims to determine whether schemes by Tesco, Sainsbury’s, and Morrisons mislead shoppers and offer genuine savings.
The CMA examined if non-loyalty prices were artificially inflated to make loyalty prices seem more appealing. To this end, it collected data from retailers and analyzed pricing before, during, and after loyalty price promotions.
The CMA’s probe has already reviewed tens of thousands of loyalty price promotions. In a statement, the regulator indicated that it is “unlikely to identify widespread evidence of loyalty promotions that mislead shoppers in this way.”
However, the CMA noted instances of retailers alternating between ‘was/now’ promotions and loyalty price promotions, raising questions about the true “regular” price and the authenticity of the claimed savings. This issue is being further investigated.
Additionally, the CMA is comparing a sample of supermarkets’ loyalty prices with prices at other supermarkets. It highlighted the importance of shoppers understanding how loyalty prices compare with other retailers’ promotions.
The CMA has also commissioned a consumer survey to examine the impact of loyalty pricing on shopping behavior, including price comparison, engagement with loyalty schemes, trust in price savings, and concerns about the use of personal data.
A full report of the findings will be published in November.
Tesco offers over 8,000 Clubcard Prices deals weekly, while Sainsbury’s has expanded Nectar Prices to about 7,000 products, helping both chains gain market share.
Helen Dickinson, Chief Executive of the British Retail Consortium, welcomed the CMA’s update, stating that retailers must demonstrate clear value to attract and retain customers.
In a related analysis of supermarket profitability published last year, the CMA found no evidence that weak competition contributed to recent grocery inflation. While the analysis reassures consumers that competition pressures retailers, grocery prices have still increased and are expected to remain high.
The report noted that not everyone benefits equally from retail competition, citing examples like Aldi and Lidl not offering online shopping and lower prices at larger stores compared to convenience branches, limiting accessibility.
Dickinson highlighted the sharp decline in food inflation to 1.5% in June 2024 and acknowledged that while operating profits have slightly recovered, they remain below pre-cost of living crisis levels. She emphasized that effective competition is keeping grocery prices low in the UK, making it one of the cheapest places for groceries in Europe.
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