I started going to Tesco about 9-months ago when I got into the habit of getting my groceries after my weekly swim session. They have a great selection of meat-alternative products, and it was right next door! As a lazy girl, it made sense. But after a while I started to notice something that started to bug me. I kept picking things up that has two prices. One printed in small and one printed in big type, the later being the 'clubcard price'. For the first few months I would pick an item up, see it was WAY more expensive if you don't have a clubcard and then put it back down. My thought process was: "I will get something similar that is less expensive, I don't want to get a clubcard and give away more data than I already am.". However after a while, deals started popping up on things that I really love like those Kvark yoghurts... So I caved. I got a clubcard. But this really got me thinking about the ethics of this system, in light of the cost of living crisis and the way that the 'clubcard prices' felt like the standard price, alongside a hugely inflated non-member price.
Why Clubcard Pricing Worries me
Being charged more than (what I would guess) is the baseline price, if you're not part of the club.. incentivises you to be part of the club. This is incentivising people to exchange their data for lower prices. Looking at it the other way: You are paying the price for withholding your data.
Am I crazy for thinking that's crazy?! This is, at the very least, sketchy, but the more I think about it, the more I see its potential to disproportionately affect lower-income shoppers. We now have to trade our privacy, for affordability in the basic thing we need to live. Food.
The UK's Competition and Markets Authority (CMA) have also started investigating whether schemes like this harm competition and make it harder for consumers to compare prices across supermarkets. This happened after Tesco extended this double-pricing for members versus non-members to their phone contracts on Tesco Mobile.
What Tesco does with this data
Now, don’t get me wrong, I’m not against data sharing altogether. As a marketer, I understand how valuable data is for improving customer experiences. Data enables businesses to create personalized offers, segment their customers for more tailored communications, and even predict future trends. But as much as this can benefit the consumer, it’s always important to remember that the primary goal is to improve the company’s bottom line.
Here’s a breakdown of what Tesco likely does with your data, based on its privacy policy and typical industry practices:
Personalised Offers and Discounts: They know what you like, so they send you discounts on those items.
Tailored Communications: Based on customer segmentation, you receive marketing that’s designed just for you.
Product Development: They analyze buying habits to decide what products to stock and where to expand.
Stock Management: Your data helps them predict how much of each item to have in-store, ensuring they don’t run out or overstock.
Store Layout Optimization: They organize their store in a way that maximizes ease for you, but also subtly encourages impulse buys.
Data Sharing with Partners: Your data doesn’t just stay with Tesco; it can be shared with third parties for targeted marketing.
Some of these ideas are great and make it easier if you want to shop at Tesco! But we also need to remember that the data is being collected to improve the bottom line. You may think this is wildly cynical or sadly realistic… but profits are being prioritised, with a veneer of putting people first.
Read an article on this topic from 2023 here: https://uk.finance.yahoo.com/news/tesco-clubcard-prices-phone-contracts-150021965.html?guccounter=1
Read an article on this topic from 2024 here: https://www.independent.co.uk/life-style/tesco-clubcard-price-rise-loyalty-card-supermarkets-b2499924.html
Marketing lessons to learn from Clubcards
As a marketer, I definitely believe there are lessons to take away from Tesco’s approach. But how can we use these data-driven strategies ethically? Here are some key takeaways:
1️⃣ Use Data to Improve Your Business—but Be Transparent
If your business values transparency, make sure you’re crystal clear about what data you’re collecting, why you’re collecting it, and how you plan to use it. For example:
Example: A privacy policy written in plain language, easily accessible on your website, that tells customers exactly what they’re signing up for when they join your mailing list or loyalty program.
2️⃣ Build Trust Through Communication and Consent
Build trust by making it easy for customers to change their preferences or request data deletion. You’ll also want to communicate openly about how you handle data.
Example: A newsletter sign-up form with clear consent options, where customers can opt in or out of different types of communication.
3️⃣ Make Privacy Policies Accessible and Understandable
No one should need a law degree to understand your privacy policy. Keep it simple, accessible, and easy to read.
Example: Test your privacy policies for readability using a tool like the Flesch-Kincaid readability test, ensuring they aren’t filled with legal jargon.
4️⃣ Segment Your Audience, but for the Right Reasons
Segmentation can help you provide more relevant content and offers to your customers, but make sure it’s done thoughtfully and with their best interests in mind.
Example: If you sell textiles, differentiate between buyers of contract fabrics and home décor fabrics, as they’ll need very different types of communication.
5️⃣ Handle Data with Care and Integrity
If you say you’re going to handle data responsibly, follow through. Ensure customer data is encrypted and not misused, and stay true to your privacy promises.
Example: A clear process for data deletion and transparency about how and why data is shared with third parties.
Final Thoughts: The Balance Between Data and Ethics
While Tesco’s approach to data collection may provide some convenience, we have to ask ourselves: at what cost? As consumers, we need to be aware of the trade-offs involved in these “loyalty” schemes. As marketers, we need to ensure we’re collecting and using data in a way that’s ethical and respects our customers’ privacy.
So, what do you think? Are you willing to trade privacy for discounts, or do we need a better balance between value and ethics?
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