Reward cards: the cost of your loyalty
Supermarkets have been rewarding our loyalty for over ten years and while it seems like a fair deal, could they be getting more out of it than we realise?
In 2003, the film maker and political campaigner Michael Moore gave a live show in London in which he instructed the audience to fish their Nectar cards from their wallets, and place them in a bowl. The audience then looked on in shock as Moore proceeded to cut up the cards on stage. It was a public demonstration against the idea of allegiance to a corporation. His message was: Don't be fooled into trusting them.
Recently, the debate over the value of loyalty cards has gathered pace, with a Home Affairs committee looking into whether customers should be told more about how the information stored on loyalty cards is used. So should we listen to Moore, or simply enjoy the rewards?
Where it all began
Loyalty cards were first introduced in 1995, and there are now 27 million floating about, which means that 85 per cent of households have signed up to at least one. Out of the 22 million households in the UK, half own a Nectar card, 10 million own a Tesco Clubcard, and a whopping 15 million people have a Boots Advantage card.
It seems like a good deal: We get money in the form of points, for doing nothing but spending our cash at a particular store. In Tesco's case we are given 1p for every pound spent. At Boots it is 4p for every pound. But, whenever we hand over our card, we are not simply being given money for nothing; we are participating in a reciprocal deal. Our rewards are an exchange for the invaluable information we give them about the goods we purchase. Simply from the items we buy, it is possible to determine the category of person we fit into, and that information is used, critics say, to manipulate us into buying more.
An invasion of our privacy?
Dr David Murakami Wood, managing editor of the journal Surveillance & Society, points out that this is certainly not a fair exchange. 'Loyalty card data is worth far more to the company than the tiny discounts they pass on to card holders in return,' he explains. 'If consumers knew the value of what they are giving up, they would realise that not only are they giving up a large chunk of their privacy, but they are selling it cheap.'
Some people are comfortable with the idea that our privacy is no longer guaranteed. After all, we already live in society that is accustomed to surveillance. There are currently over four million CCTV cameras in Britain (that's one for every 14 people), automatic systems can recognise our number plates and even our faces, and we may soon have to carry biometric ID cards. However, as part of the Commons Home Affairs committee investigation into surveillance, which is now underway, loyalty cards are among the things that are being scrutinised to determine whether the use of their data breaches any human privacy laws.
What do they know about you?
The degree to which this 'dataveillance' can reveal who you are is astonishing. For instance, the amount of toilet paper tells them how many people are in a household, the ingredients we buy tells them if we cook food from scratch, and the type of product we buy can allow them to stock their shelves accordingly. They may choose to give us what we want, or, in some cases, drop that item if it is a cheap brand, and stock a more expensive alternative. Retailers are also able to utilise direct marketing tactics from this data by sending customers information through the post on products that think would specifically appeal to that individual.
There is even evidence that information gathered has led people to adopting new, and often unhealthy, eating habits. We are now a nation that loves ready meals, and it is an interesting fact that our appetite for them has increased since the emergence of smaller supermarket branded convenience stores, such as Tesco and Sainsbury's Local, offering sections crammed with convenience food. These 'local' stores have come under fire for putting smaller retailers out of business and one of the main reasons they have been so successful is because their loyalty cards can pinpoint the culinary tastes of a certain area.
John Derham, who chairs the Commons Home Affairs committee, says that shoppers should be given more information about how the data is used. 'It's not being explained to people that this information could be used to put the local shopping centre out of business,' he points out.
Data protection
But does it really matter if retailers know what we buy? The supermarkets argue that loyalty card data is good for the customer because it allows the retailer to give them the items they want. But, although they do not sell information to a third party, it is always a worry that, once the information is out there, cardholders remain vulnerable to accidental leaks and data theft.
If you are still happy to use your card after reading this, remember that it's always worth redeeming the points you tot up, since UK shoppers are sitting on a massive £2 billion of unclaimed goods and discounts.
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