Tesco accused of misleading customers with ‘unclear Clubcard pricing’

Tesco has been reported to the Competition and Markets Authority (CMA) over concerns its Clubcard pricing offers could be misleading consumers.

Consumer rights group Which? says it believes the offers made available as part of Tesco’s Clubcard Prices initiative “could be breaking the law” and leave customers at risk of spending more on their food shop than necessary.

Under the scheme, Clubcard members are able to access lower prices than non-members for some products.

But Which? says the “vast majority” of deals offered under the Clubcard Prices scheme are not clearly explained as consumers are not given a cost per unit price. The consumer watchdog says in some cases larger pack sizes actually represent better value for money than the Clubcard offer but Tesco is not making this clear.

For example, the price for a 700g bottle of Heinz tomato ketchup in Tesco is £3.90, or 55.7p per 100g. As part of the supermarket’s Clubcard Prices deal the same bottle was on offer to members for £3.50 – this makes it 50p per 100g but this information was not provided. Meanwhile, a 910g bottle of the same ketchup was available for £3.99, or 43.8p per 100g making it better value for money per 100g but this is not made clear to customers who may assume the Clubcard deal is the best available.

Tesco’s unclear Clubcard pricing is at best confusing for shoppers struggling with soaring food inflation and at worst, could be breaking the law.

Sue Davies, Which?

Tesco says it is “disappointed” by the action taken by Which? and has described its claims as “ill-founded”, underlining that it is “complying with all the current rules”.

In April, Tesco CEO Ken Murphy credited its Clubcard Prices initiative, as well as its Aldi Price Match and Low Everyday Prices propositions, for helping to drive value perceptions and stave off competition from the discounters amid the cost of living crisis.

Which? says omitting the unit price on these offers “at a time when there is a cost of food crisis” is not helping consumers manage budgets effectively.

Why retailers are using loyalty cards as a promotional paywall

“Tesco’s unclear Clubcard pricing is at best confusing for shoppers struggling with soaring food inflation and at worst, could be breaking the law. This is simply not good enough from the UK’s biggest supermarket,” says Sue Davies, head of food policy at Which? “Tesco should think of its customers and act now to introduce clear unit pricing on all offers, including Clubcard promotions, so shoppers can easily find the best value items.”

It is urging the CMA to look at unit pricing on the “growing number” of supermarket member price schemes as part of its review.

Sainsbury’s introduced discounts for loyalty card member with the launch of Nectar Prices in April, and Asda and Morrisons have added similar deals in grocery and Boots launched its Price Advantage scheme in March.

“At this time of crisis, supermarkets cannot cut corners; they have a duty to ensure pricing is clear so that customers can get the best value,” says Davies. “We also need to see these retailers support consumers in the face of high inflation by stocking a range of essential budget lines in smaller stores, particularly in areas where people are struggling most.”

In response to the complaint, a spokesperson for Tesco says: “We always take care to ensure we are compliant, which is why we asked Trading Standards to review our approach on Clubcard Prices. They formally endorsed our labelling, confirming it meets the current legal requirements and guidelines.”

The supermarket adds it is “supportive of calls for greater clarity on the regulations in this area” as it benefits both businesses and consumers. It says it is now “actively looking” at how it can make the way it displays pricing “even clearer” for customers.

No ‘negative impact’

Given the number of loyalty based price deals now on offer to consumers, Patrick O’Brien, global retail research director at GlobalData says it’s “understandable” concerns over misleading claims are being flagged by Which?.

“Because of the cost of living crisis, everything at the moment is about bringing loyalty cards into immediate value and trying to show you can get value immediately,” he says, which is why retailers including Sainsbury’s and Boots are re-engineering their loyalty schemes to create more short-term benefits.

Even if Tesco is told to add the price per unit to its offers, O’Brien believes these loyalty-based discounts will remain popular among retailers given the current economic climate, because that’s what consumers are looking for.

He also notes in the Heinz example presented by Which? the Clubcard discount does still offer a cost saving for consumers, even if the cost per unit is higher with than the larger pack. “I don’t see it as a great deception,” he explains. “Obviously it’s more helpful to consumers – and fairer – to put such detail on all prices, including the promotional prices.”

While Tesco may be forced to add the price per unit to Clubcard promotions in future, O’Brien doesn’t believe this will have “any real negative impact”.

In 2015, Which? made a super-complaint to the CMA about supermarket pricing. In response to this, the CMA said that failure to display the unit price on special offers could be considered a “misleading omission” under the Consumer Protection From Unfair Trading Regulations 2008. Which? says that the same argument could apply to Tesco’s Clubcard price offer.

Earlier this year, the CMA announced a review of how supermarkets are complying with the rules on pricing by unit. It is due to publish its report, including recommendations to the government, next month.