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Competition bosses have been slammed for wasting millions on an investigation into supermarket loyalty schemes, after the CMA admitted it had found “no widespread evidence” customers were being misled.

A report by the watchdog today said despite probing “tens of thousands” of supermarket prices it had unearthed little to suggest loyalty promotions were based on bogus savings for customers, though elsewhere its report claimed supermarket fuel prices were still too high.

Industry experts said the probe, which follows a report last year by the CMA clearing supermarkets of allegations of profiteering, had been what one source described as a  “colossal waste of taxpayers’ money”.

The CMA report looks at fuel prices and wider retailer profitability, as well as the findings from the probe it launched into loyalty cards in January.

The watchdog has been exploring whether loyalty pricing, such as Tesco’s Clubcard Prices and Sainsbury’s Nectar Prices, have been “misleading” shoppers and whether loyalty prices offered by supermarkets are “genuine promotions” and “as good a deal as presented”.

Today the CMA said its investigation results so far suggested it was unlikely to identify widespread evidence of loyalty promotions that mislead shoppers, though it claimed it had unearthed some practices that would be subject to further investigation and it was now asking shoppers for their views on loyalty cards.

“In our analysis we have seen examples of retailers alternating between ‘was/now’ promotions available to all shoppers and loyalty price promotions,” said an update on the report.

“This raises questions as to what the ‘regular’ price is for the product and therefore whether the claim saving for the ‘was/now’ promotion is genuine. We are looking further into this issue.

“We are also comparing a sample of supermarkets’ loyalty prices to those prices charged by other supermarkets at the same time. Particularly given concerns raised by stakeholders, it is valuable for shoppers to have insight into how loyalty prices can compare with prices available elsewhere, including when they are on promotion at other retailers.”

The CMA has commissioned a consumer survey to understand the impact of loyalty pricing, which it said would form a key part of its next report in November.

“The CMA has been assessing whether the savings on offer through loyalty schemes are genuine,” it said.

It concluded: “The analysis – involving tens of thousands of loyalty price promotions – is ongoing, but the results to date suggest it is unlikely to identify widespread evidence of loyalty promotions that mislead shoppers.”

Sainsbury's nectar loyalty

The watchdog has also been looking at the wider issue of supermarket profitability, despite its report in 2023 finding no evidence of weak competition in the sector.

The latest analysis showed that while retailers were trying to increase margins from the “historically low” levels of 2022/3 there was little evidence of any artificial inflation.

It said the update should provide shoppers with “reassurance that competition in the groceries sector appears to be effective in bearing down on retail margins”.

“The forecasts also show that most retailers are planning for their gross margins in groceries to remain at current levels or decline over the current financial year,” the  report added.

“This suggests that grocery prices charged to consumers should broadly move in line with any changes in the cost of goods being incurred by retailers.”

BRC CEO Helen Dickinson said: “We welcome the CMA’s update that they have not found widespread evidence of misleading loyalty promotions.

“Whether it’s everyday value, or loyalty schemes discounts, retailers know they have to demonstrate clear value to attract and retain customers.

“The CMA update once again shows that supermarkets are doing their best to provide great value groceries for their customers. With food inflation now returned to normal levels, fierce competition between retailers is ensuring customers are the big winners from the UK’s supermarket sector.”

But Shore Capital analyst Clive Black said the report showed the continued investigation by the CMA had been “nonsensical”.

“The world and its wife knew that that this was a spurious investigation by an organisation with not enough to do, listening to every moan from everyone and sticking its nose into something that is pretty upfront, transparent, and free,” he said.

“Common sense has prevailed, for which there will be a notable sigh of relief.”

Black said the CMA findings on supermarket margins were “really worrying” as it appeared to suggest that low margins should be the aspired-to norm for food businesses.

“Is the CMA seriously suggesting that sub-3% supermarket margins are a good thing for consumers and the health of the British food system?

“That would be a massive dent on the drive for innovation and maybe productivity in time.

“What then for manufacturers where margins can be much higher? What about other financial metrics, something for the whole supply chain, including some in the farming community to consider?”

The most negative finding was around fuel. The body said drivers were still paying too much to fill up their cars, with fuel margins at supermarkets double what they were in 2019.

It said high prices in the industry cost motorists more than £1.6bn in 2023 alone, with competition among retailers still “failing” consumers.

Black said: “What is incredible it is that the CMA only considers the supermarkets. Surely there is a much bigger fish to fry on motorway service areas.

“What about the cost of driving somewhere to find a lower price? This feels more about seen to be doing something over substance; the CMA should remember the declining availability of forecourts in its considerations.”

Dickinson said: “The fuel market covers both supermarkets and non-supermarket fuel retailers. Supermarkets remain focused on delivering the best overall value for their customers across all products that they sell, including food and petrol. Retailers will continue to work closely with the CMA and provide the necessary data to allow consumers to find the best prices for petrol and diesel.”

Ged Futter, founder of The Retail Mind, added: “The headlines shout about drivers paying too much for fuel.

“But what does the CMA want, cheaper fuel and inflation passed through on food or supermarkets to protect against food inflation and keep the prices of food down?

“You don’t have to be a rocket scientist to know what is the priority for UK shoppers.

“The fact is this whole expensive CMA process has been extremely politically driven and has unearthed absolutely nothing to suggest the UK groceries sector is uncompetitive.”