Who: Competition and Markets Authority (CMA)
Where: United Kingdom
When: 26 July 2024
Law stated as at: 16 August 2024
What happened:
The UK CMA has been reviewing loyalty pricing in the groceries sector since January 2024, in line with its programme to help tackle cost of living pressures in the sector. The work is focusing on whether any aspect of loyalty pricing could mislead shoppers, any groups of shoppers are disadvantaged by loyalty pricing, and loyalty pricing is impacting consumer behaviour and how this might impact how supermarkets compete with each other.
The regulator’s aim is for consumers to have confidence that purported savings are genuine and to make informed choices. It provided an update about the various aspects of its ongoing investigation on 26 July 2024.
The CMA has been working with retailers to gather information around whether pricing practices show that non-loyalty or non-member prices are artificially inflated to mislead shoppers into believing they are better than they are. The investigation is ongoing but, at present, the CMA feels it is unlikely to find widespread evidence of loyalty promotions which may mislead shoppers.
Further exploration is also needed where loyalty price promotions are alternated with ‘was/now’ promotions highlighted through the investigation. This pricing method raises issues as to what the ‘regular’ price is and therefore whether the claimed saving under the ‘was/now’ promotion is real.
Samples of loyalty prices used at the same time across different supermarkets are being reviewed and compared, in order to provide transparency to shoppers as to how loyalty prices compare.
A consumer survey has been commissioned to understand the impact of loyalty pricing on shopping habits, including how much people shop around and compare prices. This will also look at whether:
- Loyalty pricing is affecting shopper engagement with loyalty schemes.
- Shoppers trust that price savings are genuine.
- Shoppers have concerns about the use of their personal data by supermarkets.
- Attitudes to loyalty pricing vary between types of shoppers and how.
The CMA’s full report of its findings will be published in November 2024. It will set out the CMA’s views on how retailers can ensure loyalty price promotions and the use of ‘was/now’ promotions in close proximity are used in compliance with consumer law.
Why this matters
With an increase in the use of cheaper prices for loyalty scheme members and continuing cost-of-living pressures, it is important that supermarkets do not mislead shoppers and that shoppers can make properly informed choices. Supermarkets must ensure that loyalty prices are genuine promotions and are not made out to be more attractive than they actually are, must not disadvantage any groups of shoppers and saving claims must be accurate. The full report of the CMA’s findings should help provide some guidance on how they view supermarkets can ensure compliance.
