The ‘deeply worrying’ and unstoppable rise of supermarket loyalty cards

Imagine you’re walking down the aisle at Tesco and you’ve just picked up some cheese. The device in your hand flashes. What about some red wine? 

Then you’re online shopping, and you’re just about to check out your basket. You’re proud, for once, that you’ve not added crisps and chocolate to the weekly shop. As you go to check out, reminders to buy those items flash up. Ah, go on then. 

All this means you’re showing “microscopic” behaviours which indicate a risk of switching to Sainsbury’s. Here are some deals. Take that rival product out of your basket. Stay loyal. It’s the future of shopping. And it’s going to get weird. 

Get the latest news and insight into how the Big Issue magazine is made by signing up for the Inside Big Issue newsletter

If you haven’t visited Tesco in a while, you might not be familiar with the “Clubcard price”. The usual price for, say, a meal deal is £3.90. But with a Clubcard, it’s yours for just £3.40. Almost any product you can think of might have a similar discount. A bunch of bananas: £1.55 without a Clubcard, £1 with. A pack of easy-peel oranges: £2.30 down to £1.60. Six apples: £3.25 down to £2.50.

Added up over the cost of a shop, it amounts to a significant premium if you haven’t signed up. It’s a no-brainer. But these Clubcard prices are the next step in the evolution of supermarket loyalty cards. Almost every big shop has one now – from the Sainsbury’s Nectar card to Asda’s ‘superstar products’ – all offering some form of discount for loyal customers. 

What’s more, these prices might not be all they seem. Consumer magazine Which? this week accused supermarkets of changing prices right before a promotion came into place. For example, a pot of coffee going up from £6 to £8.10, just before a promotion offering a loyalty card price of – you can guess where this is going – £6. Sainsbury’s and Tesco said they adhere to Trading Standards rules, and that inflation has a part to play.

But as the cost of living crisis grips and grocery bills climb, concerns over the schemes are growing. What are you being asked to give up in exchange for a cheaper trolleyful of goods? 

‘Privacy has become a luxury’ 

“If you’re poor, increasingly privacy has become something of a luxury,” says Caitlin Bishop, senior campaigns officer at Privacy International. 

“If you don’t have money, you just factually have less privacy. Given that privacy is an increasingly important human right, that is deeply, deeply worrying to us.” 

In March, the Big Brother Watch campaign group accused supermarkets of exploiting the cost of living crisis with the schemes. Jake Hurfurt, head of research and investigations, said there were concerns over the freedom and consent shoppers actually have when they decide to sign up. 

“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,” Hurfurt says. 

“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.” 

Retailers should be clear about how they use this data, he adds: “Shoppers are understandably going to use these loyalty schemes to save money and they should be told upfront about what might happen to their information.” 

The birth of the loyalty card

There was a time we went to the shops without loyalty cards. The shopkeeper might have known your name, but his bosses didn’t know your date of birth. That all changed in 1994, when a couple, Edwina Dunn and Clive Humby, were asked to give a presentation to Tesco’s board. 

When a shopper buys something, it generates data. With the right expertise, the right mindset, you can take this data and learn amazing things about your customer. Find out their spending patterns, exactly what they’re buying, and you can sell them even more things. 

Dunn and Humby said their company, Dunnhumby, could do this 15 times quicker and 20 times cheaper than Tesco’s own boffins.  

“What scares me about this is that you know more about my customers after three months than I know after 30 years,” Tesco’s then-chairman, Lord MacLaurin, told them at the end of the presentation. The Clubcard was born. Within a year, the supermarket had doubled its market share. 

The couple, who left Dunnhumby behind in 2010 after cashing out for an estimated £93 million, declined to be interviewed for this story. 

From that presentation, however, loyalty cards grew to become a fixture in our lives just as data became, in the words of Humby, “the new oil”. The exchange used to be fairly simple: shoppers gained points, then every so often an envelope would come through their door with some vouchers rewarding them for their loyalty. For Sainsbury’s customers, there was the prospect of going on holiday with points earned from the Nectar card. 

When the post-2008 recession hit, it was the Clubcard that Tesco deployed to stop customers leaving for cheaper retailers, doubling the amount of points shoppers earned on certain items. Today, the schemes are ubiquitous – and far more complex. 

Lidl Plus gives customers discounts on certain items, as well as rewards like a free bakery item if you spend £50 a month. Asda Rewards gives customers cash in a “cashpot”, which accumulates by buying items, certain “superstar products”, or completing “missions” such as buying a certain amount of fruit and veg. 

My Morrisons gives shoppers personalised offers and has specific “clubs” for groups like teachers, parents with babies and NHS workers. Iceland and Co-op also have similar schemes. 

All told, a simple trip to the supermarket is likely to involve handing over not just more cash than ever before, but a treasure trove of data. 

What Tesco knows about me 

To discover the extent of this, I decided to ask Tesco for my Clubcard data. I got back a big file, hundreds and hundreds of lines of information. Pesto appears 13 times, pasta appears 22 times. Aubergine narrowly beats courgette by 23 to 22. For every time I’d used the card, there were details – how I’d paid, the format of each shop, how big each purchase was. It knows how many people are in my household, and where I shop. 

You can make your own request if you’re interested. It seemed innocuous enough. But the raw data doesn’t touch the tip of the iceberg lettuce. 

The genius of loyalty cards lies in the category and profiling data – putting people into groups and creating categories to find out what people like you buy. Look at it this way, and it’s easy to understand why a supermarket might create special discounts for teachers or NHS workers.  

Am I more likely to buy alcohol late at night? More likely to splash out on unhealthy delivery products after buying said late-night alcohol? Is there a shop I’m particularly prone to visiting on the way home from work and buying some chocolate? Look a bit closer at the data, and I’m sure the answers are all there – and all useful. 

In its privacy policy, Tesco says it uses information about shopping habits to “group customers into different segments”, allowing it to personalise offers. It can also measure the effectiveness of advertising, to see if you bought something. Tesco also shares this information with media and retail partners. Sky and Virgin Media customers who shop at Tesco might see personalised adverts while they’re watching TV, based on their “general shopping habits”. 

“For example, you may be in a group of households which is shown an advertisement for coffee, having previously bought coffee at Tesco with your Clubcard,” Tesco explains. 

Slice and dice that endless list of pesto and courgettes enough, and you’ve got something of huge value to a lot of companies.

‘You never know where this data will end up’ 

“What people miss is how much information you can infer from people’s shopping habits,” says Bishop. But you never really know where this data is going to end up, even if the original company is completely trustworthy, Bishop adds. “If you can’t work out who has it, whether it’s right or wrong, and follow it where it’s going, it can be really problematic. You never know whose hands it’s going to end up in. Consumers don’t get the option of making an informed decision about the data they’re giving over, and being able to weigh that against the benefit they get.” 

It plays into wider issues around poverty and privacy. Not only do those struggling to get by have, in practice, less choice about whether to give up their data, they’re vulnerable in other ways. Take universal credit, which has been condemned as “more remote, inflexible, demeaning and intrusive” than its predecessor. Those going through the UK’s immigration system are also tracked and spied on, says Privacy International. Or perhaps those living in poverty will have an older phone which has fallen out of a manufacturer’s update cycle, and so is more vulnerable to data attacks. 

Academics have warned this privacy divide could make poverty worse. “Big data could widen economic gaps by making it possible to prey on low-income people,” wrote American researchers in a 2017 paper, “or to exclude them from opportunities due to biases that get entrenched in algorithmic decision-making tools.”

How your data could be used 

The examples you read at the beginning of this story – about targeted adverts for cheese – were taken from a blog by Dunnhumby, Tesco’s data experts and the company founded by Edwina Dunn and Clive Humby. 

The company was speculating about how your data might be used, based on the information they have. But, in some ways, the future is already here. Personal, targeted data is being used in uncomfortable ways. 

In 2012, an angry father turned up to a branch of the American retailer Target, incensed that his teenage daughter had been receiving vouchers for baby items.

As it turned out, the shop knew she was pregnant before she did. It assigned customers a “pregnancy score”, based on certain shopping habits, such as buying vitamin supplements, and could even accurately predict somebody’s due date. 

Admiral, the insurance firm, tried in 2016 to introduce a scheme which would have analysed young drivers’ Facebook data to determine how much to charge them. Short sentences, lists, and using set times and places to meet would all mark somebody as organised and in line for a cheaper quote. Exclamation marks and language like “always” counted against the first-time drivers. 

Durham police got into hot water in 2018 for using credit data to identify those at most risk of reoffending. 

And now a trip to the shops might involve a brush with facial recognition, as increasing numbers of supermarkets in the UK turn to the technology to identify shoplifters. It’s gone far beyond a few vouchers for your favourite brand of bog roll. The key concern for privacy campaigners, now that millions are struggling to afford the basics, is that what should be an informed decision is no longer a real choice. 

• How supermarkets are helping families over the summer holidays
• Iceland expands interest-free loan scheme as food prices soar and parents struggle to feed kids

How you can protect your data

On some level, we all accept that we go about our lives letting out little farts of data. If you want to do something about it, however, there are steps you can take. 

“It’s a bit like climate change – there are small, good things that you can personally do, but the only way to solve the problem is massive, systemic change,” says Bishop. Writing to your MP and to the government can help push for this change, but on an individual level, ad and cookie blockers can help. 

“They don’t solve the issue, but they can help to prevent some of the worst effects of it,” Bishop says. You also have the right to ask companies to delete your data (but this doesn’t stop them collecting it again), or erase it from the people they share it with. You can also change the advertising ID on your phone. 

“You can ask your phone to change that number, and if you do that on a consistent basis it’s just slightly harder for them to track,” says Bishop. 

Finally, Bishop recommends always claiming your money if there’s a relevant class action lawsuit you are eligible for. 

“There’s lots of small things you can do that help ameliorate the worst aspects,” she says. “But ultimately the ecosystem is bad, and it needs significant root-and-branch change.” 

A spokesperson for Tesco said: “Clubcard unlocks the best value from Tesco. It is free and easy to sign up and we take our responsibilities regarding the use of customer data extremely seriously. We are open and transparent about how we use customer data and it’s easy for our customers to make choices about what they share with us. We do not sell any data we collect from customers to third parties.”

This article is taken from The Big Issue magazine, which exists to give homeless, long-term unemployed and marginalised people the opportunity to earn an income. To support our work buy a copy!

If you cannot reach your local vendor, you can still click HERE to subscribe to The Big Issue today. Or give a gift subscription to a friend or family member. You can also purchase one-off issues from The Big Issue Shop or The Big Issue app, available now from the App Store or Google Play