in market share. More importantly, the group also reported an increase in
like-for-like sales of 10 per cent – its best for over five years. Whilst stress-
ing that the Clubcard is part of its long-term customer service plan, Sir Ian
McLaurin, Tesco chairman, attributed a large part of the company’s success
to the scheme, ‘We were determined to be the first and now Tesco Clubcard
is theloyalty card in retailing. There is no doubt that it has helped boost our
profits.’ He commented that the card now had almost seven million
members who had received £25 million worth of vouchers so far, of which
£24.5 million had been redeemed.
In contrast, Sainsbury’s figures were now beginning to show the possible
knock-on effect of Clubcard, with like-for-like sales down by 2.2 per cent
over the same six months. David Sainsbury conceded that the Clubcard
effect had eroded individual store sales by 0.6 per cent, where a Sainsbury
store was in direct competition with a nearby Tesco, which in his eyes ‘was
not a very great one’. David Simons, CEO of Somerfield (no. 5 in the indus-
try league), openly disputed this claim and calculated that it was much
more likely that Tesco would be taking nearly 3 per cent in sales from any
nearby rival. Despite the insistence that the effect was of little consequence,
Sainsbury widened trials of their Saver Card to 170 stores in June (although
it still did not have the data capture facilities of Clubcard). Meanwhile the
Marketing Director, Antony Rees, stressed that they would not be rushing
into a national scheme, ‘Why come first and get it wrong? We would rather
come second and get it right. We will continue to listen to our customers to
see what they want and react to them, rather than our competitors.’
However, they did extend the Homebase Spend and Save Card (which
was one of the UK’s first loyalty cards), to include all purchases at the
recently acquired 214 Texas Homecare stores. The vouchers earned from
expenditure on DIY and gardening products in these stores could be
redeemed in all of Sainsbury’s UK outlets, including supermarkets.
Analysts saw this as a sensible stopgap measure to counter the impact of
the Clubcard. Sainsbury did confirm that the company was looking at
ideas for a loyalty card with better benefits than Tesco. David Sainsbury
was quoted as saying that, ‘we want to find something which gives better
value to the customer, which really rewards loyalty. I remain to be con-
vinced that a card which gives just a 1 per cent discount on all your pur-
chases gives the customer much advantage.’ Another Sainsbury’s
spokesman said that the company’s experience with Saver Card had
shown that interest had waned after six months, but Spend and Save was
different because spending on DIY products and the margins involved
meant higher discounts could be given and it was much easier for cus-
tomers to accrue points. He added that Spend and Save would never
become the standard loyalty card for the company’s food stores.
Coinciding with the widening of the Homebase card scheme was the
launch of the Sainsbury’s ‘Customer First’ campaign in June 1995, in which
The customer market domain: Managing relationships with buyers 87