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Honeytrap: Can Nectar finally deliver greater customer loyalty for Sainsburys?

News   •   Feb 20, 2018 08:56 GMT

Sainsbury's has bought Nectar for £60m in a strategic drive to ensure it knows its customers "better than anyone else". But to many the move has been driven by the bitter reality that consumers are disillusioned with traditional loyalty schemes.

Back in 2007, Aimia bought Nectar for £368m. Since then, Nectar has played a key part in Sainsbury's evolution as a business – notably in 2016 the scheme was used to estimate the correlation between the brands customers and those of Argos, which the grocery business bought that year.

However, the sale of Nectar for roughly £300 million less than its valuation ten years ago is a stark reflection of changed customer behaviour. When you consider Aimia is paying £105m to Sainsbury's to account for the number of unredeemed Nectar points in circulation, it becomes clear loyalty schemes are facing no less than an existential crisis.

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