Tesco Launches Amazon-Style Subscription Program

Tesco is taking on the competition by adding a subscription option to its Clubcard loyalty program.

Originally launched in 1995, Clubcard helped Tesco beat its competitors to become the U.K.’s largest supermarket group. On Friday (Nov. 8), the company announced it was rolling out Clubcard Plus. For £7.99 a month, customers will have access to 10 percent off two big shops up to £200 each; 10 percent off customers’ favorite Tesco brands at all times; double data on a monthly contract for new and existing Tesco Mobile customers; and exclusive access to apply for a Tesco Bank credit card with no foreign exchange fees. The company says a customer’s potential savings add up to more than £400 a year.

“We know that our customers are always looking for ways to make their money go further. That’s why we’re launching Clubcard Plus – so that they can get better value on the products and services that matter most to them, throughout the whole year,” Alessandra Bellini, Tesco chief customer officer, said in a press release.

The move is a page out of the Amazon playbook, as the eCommerce giant has seen great success with its own subscription service, Amazon Prime. Earlier this year, a study revealed that more than half (51.3 percent) of U.S. households will have Amazon Prime memberships this year, which would equal 63.9 million households in total.

“Prime has been very effective for Amazon,” Steve Gray, founder of consultancy SG Retail, said to the Financial Times. “People will pay for something that demonstrates value.”

Others agree with that assessment. James Anstead, European food retail analyst at Barclays, said Tesco’s new offering should be popular, and compared it to a similar program launched by French supermarket group Casino. And Bruno Monteyne at Bernstein said the move should benefit Tesco’s larger stores, which have been struggling since the expansion of rivals ALDI and Lidl.

While retailers including Sainsbury’s, pharmacy chain Boots, and Marks and Spencer have all launched their own loyalty schemes, others such as Asda, ALDI and Lidl believe these programs are a distraction from their already low price points.

And Rita Clifton, a former chief executive at consultancy Interbrand and a non-executive at ASOS, believes brands with an established fan base don’t need to rely on loyalty programs. “There’s no getting away from the Darwinian fact that strong and loved brands have to give less away to keep customers than weaker, more commodified ones,” she explained. “Many ‘loyalty’ programs are actually bribery programs … you end up giving money away to people who either would have bought from you anyway, or those who only come in and out when there are offers.”