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Sainsbury’s is paid £100m by Aimia to take Nectar off its hands – and the lessons to learn

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I have been telling anyone who would listen for the last couple of years that it was inevitable – to me – that Sainsbury’s would take control of Nectar from its Canadian owner Aimia.

Over the last few years Nectar has lost partner after partner, with Homebase and British Gas the latest to exit.  If Sainsbury’s had walked away then Nectar would, literally, be worthless.  It was only a matter of time before Aimia realised that the best it would ever achieve was a negotiated exit.

(Or, as the press release put it: “Selling the Nectar business to Sainsbury’s was the optimal risk-adjusted outcome for Aimia”.)

Sainsbury’s will have had a good laugh as it negotiated this:

Sainsbury’s is paying £60m to Aimia for the business and its associated companies and joint ventures

…. but Aimia is paying £105m to Sainsbury’s to account for the number of unredeemed Nectar points in circulation

…. plus a further £55m to Sainsbury’s as a ‘net working capital adjustment’

Depending on how you treat the working capital adjustment, Sainsbury’s has therefore been paid either £45m or £100m to take Nectar off Aimia’s hands.

In pure cash terms, we know that the press release states: “Adjusting for and giving effect to the Nectar transaction, Aimia’s net cash and liquidity position will be reduced by approximately $174 million.”

Of course, Sainsbury’s is on the hook for future Nectar redemptions.  The majority of those will be in a Sainsbury’s store, however, and the supermarket can now change the redemption rate – or kick out other redemption partners to increase in-store use – to ensure that it makes a decent profit on the £105m it received.

For Aimia this is another body blow.  The main part of the company is Aeroplan, the Air Canada loyalty programme which was sold off.  Air Canada announced last year that it was starting a brand new loyalty scheme and severing all ties with Aeroplan, leaving Aimia in serious trouble.  I explain that story in detail in this article.

Imagine if IAG sold Avios for £3bn – which is what it is worth based on £200m of operating profit – and then in a few years time announced that it was relaunching BA Miles, severing all ties with Avios and leaving Avios shareholders – and members, who could no longer redeem for flights – up a rather wide creek and paddle-less.  That is what happened to Aimia with Air Canada.

What should the industry learn from this?

There is a lesson here for Clubcard and Avios.

Loyalty schemes with revenue based redemptions do not work.

Customers like ‘gamification’.  Customers like the fun of thinking they are being smart and they are maximising the value of their points.  When customers can find ways of getting outsize value from their points, they will go out of their way to collect them and focus their spending on products that can offer them.

No-one cared about Nectar.  Since 1 Nectar point was worth 0.5p in 95% of cases, people just treated it as cashback.  However, it was cashback that involved effort to redeem.  If you saw a product in Sainsbury’s offering 100 bonus Nectar points, you just got annoyed because you would have preferred them to offer 50p off upfront and save you the faff of spending them.

To give it credit, Nectar has been trying harder over the last year or so.  The Nectar app has had a few decent deals from time to time, mainly with Virgin Trains.  However, even here they messed up.

Almost all Nectar offers are targeted.  Very few are open to all.  This means that we can’t write about them on Shopper Points, so they don’t get circulated.  They also don’t get discussed on moneysavingexpert, hotukdeals and other ‘deals’ sites.

Nectar may have felt it was being clever using only targeted offers, but in reality it was costing itself a small fortune in free publicity.  As an example, note the big plug we gave to Tesco on Head for Points and Shopper Points yesterday for its current LEGO bonus points deal.  If that had been targeted, we wouldn’t have written about it.

If you have a stash of Nectar points, don’t worry about spending them quickly.  They are totally safe for now.  The question now is whether Sainsbury’s is willing to be adventurous and bring in more exciting redemption and earning options.

Comments (90)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Alan says:

    Is anyone else still waiting for 10k bonus Nectar points for taking out the Nectar Amex? I received the sign-up bonus points fine from Amex themselves when I hit the spend target, but still waiting for the Nectar.com bonus. They keep saying to give it another 28 days, but should have posted already given 3 months have passed since sign-up…

    • JamesB says:

      You will get every story under the sun as to when you will get them. Something likely went wrong for you as some comments reported getting the points in 1-2 months. I threatened ASA, FCA and trading standards a few weeks ago and the points were in my account 10 minutes later.

    • Nick says:

      I believe that the T&C (Sorry, I don’t have to hand) state that the Nectar 10K will (should!) be posted within 45 days of you receiving the 20K bonus from Amex. I got the 20K posted to my Necar account around 3 weeks ago, so I’m hoping I’ll ge the 10K in the next 3 weeks. However, like you there have been a few issues mentioned here by others for sure.

      • Lewis King says:

        I tweeted them and they were in a few days later. However my father in law couldn’t get his added because apparently you have to spend over 3 months and if you miss one (he hit bonus in 2 months) they won’t send you it. Seemed like bulls*** to me!

        • Scallder says:

          That’s rubbish – I hit it in 2 months and got it. Nothing in the wording when signing up saying you had to spend in all three months.

          Threaten an ASA complaint and I’m sure they’ll give him the points that he’s actually due

        • Nick says:

          As Scallder states, that is indeed rubbish and he should persue it further.

          The T&C clearly state ” Once you have been approved and a minimum of £2000 has been spent and charged to the account WITHIN (my bold) three months of account opening, 20,000 bonus points………..and 10,000 bonus points will be awarded into your acount from Nectar.”

  • Sideshow Bob says:

    A warning! I neglected my nectar account and when I logged in for the first time in ages recently I found out some scumbag spent £100 of my nectar points in an Argos hundreds of miles from my home 6 months ago!

  • Kathy says:

    Nectar points are so very awkward not just to game in spending but in collection. I let so many targeted bonus nectar point offers pass me by because claiming them means logging on to the website with a long card number that I can never remember, or remembering to take a certain voucher to the shop by a certain date and spend x amount in y time period on z product, or get x extra points when you spend £blah more than I normally do on my next shop. Except there’s no way I’m going to spend that much within a week of spending what I’ve just spent.

    • Bagoly says:

      Will not Chrome remember your number for you?

      • Kathy says:

        Maybe? I’m not always on the same device when the offers comes through though and I still have to dig out the card to put the number in to start with, which I might not necessarily have with me at the time. The faffiness of it defeats my enthusiasm for the offer quite often.

        • Neil says:

          Get a Lastpass account and you’ll never have to remember a login again (other than your Lastpass one)

        • Lady London says:

          +1. Pretty much why I’ve never bothered with Nectar.
          If I went into Sainsbury’s more than once a year, I’d probably have given Nectar more attention.

  • mark2 says:

    Sainsbury’s were one of the launch merchants for Air Miles (now Avios) in 1988.
    They used to have excellent extra points on everyday items like coffee and dishwasher detergent.
    There days i only buy coffee and vegetable recycling bags there but will probably get the Nectar credit card for the 18,000 MR.

  • Ja Lawrie says:

    Nectar offers are notorious for not tracking. Offers like BP 500 points on next visit- last 2 times had to get customer services at Nectar to add as blamed technical problems. Often get 8 visits to Sainsburys and get 100 points plus double points on each shop. Still waiting for last 2 promos to be added. Now got one says 10 points per shop max 3 visits a day.

    On subject of this swipe and win I usually fill my tank up of £50 but split it into 5 visits of £10 (on way to work so not a trek for me) so at least guaranteed 5 x £1 to spend. But daft thing is out of the 4 petrol stations closest to me only 1 takes part in the promo. If planning on fuel to optimise promo check t&c for participating fuel stations

    • Delbert says:

      How about fill £10 of petrol, go and pay and repeat. Could get it down to two visits.

  • Ja Lawrie says:

    See below for excluded locations:

    Centrals and Locals, Sainsbury’s Cafés, Pay at Pump petrol stations, Sainsbury’s Local in connection with Euro Garages and the following petrol stations are excluded from the promotion: Aberdeen (Garthdee Road), Archer Road, Ballymena, Bath, Biddulph, Bishop’s Waltham, Blackpool, Braintree, Bridgemead, Burpham, Charlton Riverside (Greenwich), Chertsey, Cobham, Coleraine, Colne, Craigavon, Cramlington, Dartmouth, Dorridge, Dronfield, Dungannon, East Filton, East Kilbride, Edenthorpe (Thorne Road), Eltham, Ely, Forestside, Fosse Park, Glasgow Woodlands Local, Glen Road, Haverhill, Hazel Grove, Heaton, Newcastle, Kimberley, Livingston, Keighley, Hempstead Valley, Isle of Wight, Marshalswick Local, Meadowhall North, Meadowhall South, Morecambe, North Cheam, Northfield, Perton, Queens Road, Redditch, Shorehead, Solihull, Stratton, Taunton, Telford, Wakefield Ings Road, Wantage, Wednesfield, West Houghton, Whitehouse Farm, Worksop.

  • Lumma says:

    I live over the road from a huge Sainsbury’s but for some reason I keep getting coupons in-store from them for bonus points for items that they don’t actually stock in that branch.

    They’ve also seemed to have stopped doing the regular deal that appeared on the app where I got 20 points for my first shop, 30 for the second, etc. Up to 100 points. It was an easy way to rack up the points as there was no minimum spend for each shop

    • JamesB says:

      They have a 10 points per swipe offer on mine at the moment, up to 3x per day. I think I’ll pass.

      • Lumma says:

        Seems like I have that too. Not the greatest by it’s a few free points when I live that close to one

  • mark2 says:

    Nectar points can also be used at Expedia.

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