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Off topic: Sainsbury’s guts Nectar earning from April 2015

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I don’t cover Nectar much on Head for Points because it offers little in the way of travel rewards.  I have written about the ability to use your points to book easyJet flights and how the Nectar estore is the only way of getting cashback on an easyJet booking.

I also reviewed the American Express Nectar credit card last year.  This is currently a pretty good deal – no fee for the first year and £100 of Nectar points for signing up.  Amex has tightened up on who can apply, though, and you only get the £100 if you have NO American Express-issued Amex cards at all.

I have also written about how I use Nectar to (indirectly) convert my Amex Membership Rewards points into John Lewis / Waitrose vouchers.  And whether it is better to take Nectar points or Flying Club miles when booking on Virgin Trains.

That is about it.  Here is the new news:

Nectar card

Sainsbury announced yesterday that it is halving its Nectar earning rate from April 2015.  You will earn only 1 point per £1 spent rather than 2 points.  Details can be found on the Sainsbury website here.

This halves your cashback from 1% to 0.5%.  (This page on our sister site Shopper Points shows the best value Nectar redemptions – ie everything which gets you more than the standard 0.5%!)

Sainsbury is clearly doing this to cut costs, confident that Nectar is not a sufficient enough attraction to shoppers to cause them to defect in droves.  It is also ending the practice of giving you an extra Nectar point if you use your own bags – it is bringing in a charge for carrier bags instead.

The announcement implies that change is also coming to the Nectar credit card issued by Sainsbury’s Bank – “Nectar is changing for all Sainsbury’s customers, which means that the way our Bank customers collect points when they use their Nectar card in store will change in the future too.”  Note that the American Express-issued Nectar card is not impacted.

This is unlikely to signify the end of Nectar in the UK (which, few people know, is owned by the Canadian company which runs Air Canada’s Aeroplan loyalty scheme) but it will be a serious blow.

The problem with Nectar, as I see it, is that it isn’t fun.  It isn’t interesting.  You can’t ‘game’ it.  To all intents and purposes your points are worth 0.5p each and it is hard to improve on that.

Tesco Clubcard, on the other hand, is fun.  You can ‘game’ it and you have sites like this one which spend lots of time explaining how and showing you ways to run up points at minimal cost.  It has a level of customer interaction and involvement that Nectar could never dream of getting.

This is, of course, the same appeal of airline schemes.  Every time I write about a new way of earning or spending Avios points, I am effectively writing a big free advertisement for British Airways / IAG.  Poor old Nectar gets left behind.

Comments (54)

  • Julian says:

    I don’t think Tesco will follow. May people shop at Tesco because of the CC, particularly now when prices are about the same everwhere. They get people in just because of that.

  • Tom says:

    It baffles me the rediculous uproar from some quarters about points.

    Firstly you are buying the product for the product not the points. The point system is just an extra bit of a side even if it was 0.001 is still something. People have just become selfish expecting that you have to get something for just shopping.

    We have people are dying and starving in this world and people are crying over 2 points becoming 1.

    • callum says:

      Whose crying? Are we not allowed to discuss anything – most things in life aren’t as important as life itself, so until world poverty is fixed we should just sit in silence?

      As to the topic, the fact virtually everyone reading this (here and elsewhere) have said they’re annoyed but it won’t impact their shopping decisions show this was a wise move by Sainsbury’s. If you ever shopped there because of nectar then you were just throwing money away. With regards to tesco being more “fun”, the point of this devaluation was to bring in loads of bonus point offers – which they reckon will mean the regular shoppers will end up with the same number of points overall. That’s marketing speak of course, but maybe this will result in ways to exploit the scheme like tesco does.

      • Rob says:

        Nectar won’t be bringing in more generous redemption deals – that is outside Sainsbury’s control.

        The best you will see is ’50 bonus points for buying a tin of treacle’ type stuff, I reckon!

  • alen says:

    Makes me laugh people are prepared to buy inferior/low quality food for a few points whatever the cost to their local comunities/high streets, good luck to you all!

    • Richard says:

      Take your seat next to the toilet at the back of the plane and give us a wave.

    • JQ says:

      The local high street shops just resell things they buy from Tesco (or Tesco’s suppliers) at a higher price. Also, they are only open when I am at work.

  • Nils Krumrey says:

    Given the pressures the established “big 4” are under, and the relative success Sainsbury’s has enjoyed recently compared to Tesco, I don’t agree with the sentiment that Clubcard is working for Tesco. It did in the “fat” years, but it is an extra expense that can only be cross-subsidised if cost is not the overriding purchasing decision.
    Being German, unfortunately the only way is down – it happened in Germany decades ago, which is why all the German supermarkets are absolutely no fun and consistently hideous. But cheap, across the board.
    In the UK, I believe there is room for a top end that is quite unique, and that is M&S and Waitrose. I think ultimately it all gravitates towards those two extreme ends, and I don’t think there is room for expensive loyalty schemes somewhere in the middle. If Sainsbury’s is feeling the pinch, then Tesco does even more so, and if combating the discounters on price means getting rid of a whole wad of Clubcard points, I am sure they will do that. Clubcard clearly hasn’t helped Tesco defend against the discounters so far, and that is where the real threat is – not the other “big 3”.

    • YOUP says:

      But Clubcard will have given Tesco an insight into customer behaviour. Now they need to figure out how best to use this information to defend against the discounters.

      • Nils Krumrey says:

        I am of course not saying that Tesco (or Sainsbury’s) will be getting rid of their loyalty schemes altogether, but a) Tesco clearly hasn’t used the information very effectively and b) the value used to include increased customer loyalty, which by now has pretty much gone out of the window. This is clearly why Sainsbury’s made this move, and Tesco will look into the expense of it’s program too, albeit probably more subtly.

  • Andy says:

    We get quite a good deal from Sainsburys. Have a mortgage with them and every Christmas for the past 10 years we have received £150 in Nectar points. This of course will continue because £150 is £150 whether they they do 2/1 or 1/1

  • Scott says:

    I got an email from Nectar yesterday as part of a pilot group for a new feature called the Nectar Hive. It outlined the key facts as the following:

    • You will collect 10% annual interest on points in your Hive
    • Interest is calculated daily and added to your hive every Friday
    • You can deposit as many of your points into your Hive as you like, but remember you can’t spend points while they are in your Hive
    • You can withdraw points from your Hive at any time. They will be added back onto your account within 24hrs after which you can spend them as usual

    Interesting concept that they allow you to earn interest in the form of Nectar points on the balance deposited. Only downside I can see is if they have flash 1 day redemption opportunities that you potentially wouldn’t be able to take advantage of them due to not being able to spend your points if they’re not made available the same day…

    Very much doubt Tesco will do something similar with Clubcard, but an interesting development…

    • Rob says:

      That is just weird. There would be an interesting Amex arbitrage though – move Amex points to Nectar at 0.5p per point then let the 10 per cent interest compound. Then redeem for an Expedia holiday, ebay credit etc.