Tesco Offers 90 Million Personalized Coupons to Maintain Customer Loyalty

As inflation ate into Tesco’s profits, the grocer’s couponing efforts helped keep customers coming back.

The British multinational grocery giant shared in its financial results for FY2022/2023, released Thursday (Apr. 13), that operating profit at its retail stores was down 7% year over year, with the grocers’ efforts to keep prices down amid inflation eating away at its margins. Against this backdrop, however, the company kept sales up by stepping up its discounting efforts.

The company noted about 80% penetration for its Clubcard loyalty program, with more than 14 million users. Where once the grocer had one app for its Clubcard offerings and another for mobile payments, it is now shutting these down and replacing them with a unified “Clubcard and Grocery” app.

“A key part of our digital transformation is our new combined grocery and Clubcard app. We have now integrated our mobile apps into one single solution, serving our customers across all of their shopping and loyalty needs,” Tesco CEO Ken Murphy told analysts on a call. “The app isn’t just for online use. Customers can now use it to enhance their in-store shopping experience too, with additional features such as creating shopping lists and checking stock before leaving home.”

Research from PYMNTS’ study “Big Retail’s Innovation Mandate: Convenience and Personalization,” created in collaboration with ACI Worldwide, which draws from a survey of 300 U.S. and U.K. retailers, found that 79% of grocers think that consumers would be very or extremely likely to switch merchants if mobile apps were not available. Plus, 74% said the same of digital coupons and rewards. Moreover, British retailers are more likely to consider these offerings essential to customer loyalty than their U.S. counterparts.

Consequently, given the importance of digital rewards, Tesco has been increasing its discounting efforts to maintain customers’ loyalty in the face of mounting economic pressures.

“One of the advantages of driving up app usage is the ability to offer our customers a more relevant and personalized shopping experience,” Murphy said. “Over the last year, we’ve increased the number of customers receiving personalized offers to over 4 million, issuing nearly 90 million coupons in over 10,000 different combinations.”

He noted that the company aims to focus more on personalization, both through its own ecosystems and with external partners, going forward.

Certainly, inflation anxieties are running high, with price increases in the country continuing to worsen. In February, the most recent month on record, inflation for food and nonalcoholic beverages hit a 45-year high, per data from the United Kingdom Office for National Statistics, marking an 18% year-over-year increase.

One advantage that this provides for Tesco, much like leading U.S. grocer Kroger noted on its earnings call last month, is that consumers are cutting back on restaurant dining, leading them to turn to grocers to provider less expensive food options.

“[We] know that many of our customers have been looking to spend less by eating in rather than eating out,” Murphy noted, adding that the grocer’s Finest Meal Deal, offering prepared foods and wine for a discounted price, has been proving “particularly popular.”