Retail rivals fall out over loyalty

Related tags Sainsbury Supermarket Asda Wal-mart Tesco

Britain's top two food retailers, Tesco and Sainsbury, are at the
centre of a row over customer loyalty, with Tesco accusing its
rival of trying to lure away customers by offering them money-off

The two leading supermarkets in the UK, Tesco and Sainsbury, have fallen out over the thorny issue of loyalty.

The Financial Times​ reports that Tesco has accused Sainsbury of attempting to lure away its customers by offering them money off coupons. Sainsbury is said to have sent the vouchers to households in areas where rivalry between the two stores is the most bitter.

The paper reports that Tesco retaliated by sending them letters pledging to accept Sainsbury's coupons in its stores, a response which Sainsbury said simply showed how desperate its rival was.

"This is the latest spat where more expensive supermarkets try to lure our customers away,"​ Tesco marketing director Tim Mason told the paper.

"We're happy to be flexible and accept the vouchers they're sending to Tesco shoppers. It's not the first time we've done this, because it saves our customers a lot of hassle and expense,"​ he added.

Rivalry between the top two UK food retailers has been fierce for some time, since Tesco overtook Sainsbury as Britain's number one supermarket chain. Both chains have been at the forefront of trying to retain their customers by offering loyalty bonuses - something which their two main rivals, Asda and Safeway do not - but the success of such schemes has frequently been called into question.

Asda recently profited from the launch of the new Sainsbury loyalty scheme Nectar - run in association with Barclaycard, BP and Debenhams - to publish the results of a survey showing that consumers prefer low prices to loyalty bonuses.

And the furore over the amount of money customers need to spend to earn any of the major bonuses with Nectar - more than enough to pay several times for the gift on offer - has done little to help Sainsbury finally overhaul its rival and win back its number one spot.

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