UK Retailers Step Up Rewards to Help Shoppers Navigate Inflation

As Brits try to cut back on spending and expenses amid the ongoing cost-of-living crisis and double-digit food inflation, U.K. grocers are under pressure to step up their discounting efforts to retain customers.

As PYMNTS reported earlier this year, the country’s grocery inflation surpassed 17% for the first time in mid-February, per data from U.K. data analytics firm Kantar. It has since increased, with food inflation now running at 18.2% over the year to February, per a recent report from The Guardian.

As a result, British shoppers are choosing to ditch fresh for cheaper frozen food to help keep expenses down and ease the squeeze on household finances. Items such as frozen chicken were the highest in demand, The Guardian noted, with volumes rising by nearly 6% in the 12 weeks to March 20, while sales of frozen prepared foods such as ready meals and pizzas increased by 2.6%.

To retain its customers in the wake of the growing trend, Asda, one of U.K.’s largest supermarket chains, announced in a April 17 press release that shoppers will be able to earn £5 in their Asda Rewards cash pot when they buy the retailer’s frozen roast dinner solution, priced at about £12.

Read more: UK Grocers Reimagine Loyalty Programs to Keep Customers Engaged

“Ideal for families working to a budget and available both online and in selected stores, the frozen dinner solution includes one chicken joint, two sides and one ice cream dessert option, feeding a family of four a delicious roast dinner — complete with an after-dinner treat — for just over £3 per head,” Asda said.

This move is bound to attract British shoppers, who place rewards and loyalty programs among the top factors considered when choosing where to shop.

In fact, according to the U.K. edition of PYMNTS’ 2023 “Global Digital Shopping Playbook,” which assessed the shopping habits of over 16,000 consumers and merchants across six countries, Brits surveyed said rewards “are the single most important shopping feature they want merchants to provide.”

The research also shows that 40% of all U.K. shoppers want merchants to provide digital rewards programs, and 8% say that digital rewards programs are more important to them than any other shopping feature.

These findings corroborate data captured in a previous PYMNTS study, “What U.K. Consumers Expect From Their Grocery Shopping Experiences” which found that about 40% of the U.K.’s 67 million population belong to grocers’ loyalty programs, while 63% of U.K. shoppers use at least one grocer’s loyalty program.

The PYMNTS-ACI Worldwide report further revealed that 44% of U.K. grocery shoppers say they spend more at stores with loyalty programs, while 45% say the presence of a loyalty program plays a role in where they shop.

 

For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter.