Certain supermarket loyalty programmes are taking advantage of the cost of living crisis by allowing only those who hand over large amounts of personal data to avail of steep discounts, campaigners say.
Customer privacy is becoming a “luxury” for many struggling households because shoppers who wish to protect their personal information are being charged a premium by some supermarkets, which deny them access to deals enjoyed by those signed up to loyalty programmes, they have warned.
An analysis of privacy policies used by the UK’s two largest supermarket chains, Tesco and Sainsbury’s, has uncovered “disturbing” uses for shopper data buried in the small print.
Tesco’s Clubcard scheme and Sainsbury’s Nectar programme are able to create detailed profiles of customers’ preferences and spending habits that can be sold to other companies, which can target the public with specific adverts based on shoppers’ purchase histories, said privacy group Big Brother Watch.
Although directly identifying details such as names and membership numbers are removed, the information is granular enough to feed into “hyper-specific targeting” in the form of tailored advertising, it claimed.
Tesco and Sainsbury’s both tie access to discounts to data sharing, and are “the worst offenders” among the UK’s largest grocery chains for selling on the data, according to the findings.
With extreme food price inflation and spiking energy, fuel and transport bills pushing millions of households to the brink, the freedom of choice shoppers ostensibly have when deciding whether to sign up to loyalty schemes that offer members deep discounts in exchange for detailed data may be limited.
Tesco, the grocery chain with the largest market share has in recent months overhauled its Clubcard scheme, moving away from offering rewards to be enjoyed further down the line such as treats and days out, to aggressively discounting products specifically for loyalty card holders in an attempt to compete with budget rival Aldi.
Store signage and advertising makes it clear to shoppers that those not signed up to the programme will pay more for a host of products.
Essential items including cereal, cheese and nappies are substantially cheaper for customers willing to part with their data.
Currently, packs of Pampers nappies are priced at £10 for 25 for non-Clubcard holders, while shoppers signed up to the scheme will pay just £6. A 500g box of Jordans Country Crisp cereal costs £3.30 for non-members but £1.80 for Clubcard holders, while a 550g block of Cathedral City cheddar is £1.40 dearer for shoppers not willing to hand over their data, costing £5.40 compared to £4.
In addition to “identity” data including the names, titles, addresses and phone numbers of Clubcard holders, the retailer collects information about customers’ bank accounts, payment card details and purchase history. “This includes when, where, what and how you purchased that product or service,” the document states.
“We may share personal data with…our retail partners, media partners and service providers,” it says.
Tesco’s media partners include Facebook and Google, while Clubcard members who are also customers of Sky or Virgin Media “may see tailored TV advertising when using those platforms, based on your general shopping habits and those of similar households”.
Tesco does not sell customer data at an identifiable level to third parties.
Internal Sainsbury’s figures shared with investors in 2021 show that using the Nectar scheme could save customers up to £200 a year.
However, during a presentation to investors, the contents of which are publicly available online, the company revealed that it goes beyond gauging customer preferences – it also tries to predict if shoppers can afford to spend more in store by analysing their “headroom”.
Those deemed to have more income at their disposal might then be offered deals on pricier products to tempt them to spend more, while “highly price sensitive” customers could instead be offered a “deeper discount” on core ranges.
“The result is a completely personalised set of prices for each and every customer,” Nectar’s head of analytics said, according to a transcript of the presentation.
Big Brother Watch argued shoppers were “effectively paying a premium to protect their data”, and that “customer privacy is becoming a luxury”.
“It is worrying that some supermarkets are taking advantage of a cost of living crisis by pushing shoppers into trading more and more of their personal data to access discounts that used to be available to all,” said Jake Harfurt, a spokesman for the group.
“There is a serious risk that shoppers will feel pressured into handing over their data if the trend of requiring a loyalty card to access any special offer continues.”
He added: “Retailers should be clear about how they use customers’ data and not bury the details deep in complex privacy policies.”
Sainsbury’s said: “We are doing everything we can to support customers with the rising cost of living, including investing over £550m into lowering prices over the last two years. Initiatives such as our Nectar loyalty programme allows us to offer customers great deals and personalised offers based on their shopping habits, which means they can get even lower prices on the products they buy the most.
““We understand privacy is important to our customers and we make every effort to be transparent about how customer data is used at Nectar.”
Tesco declined to comment.