The Price of Loyalty
Walk into any Tesco, Sainsbury's, or Morrisons today and you will encounter what amounts to a parallel economy. The same tin of beans carries two prices: one for the digitally connected customer with a smartphone and stable address, another for everyone else. This is not a discount scheme — it is a systematic restructuring of retail pricing that punishes the most vulnerable consumers while obscuring the true scale of food inflation.
The mechanics are simple but insidious. Supermarkets inflate their 'standard' prices to levels that would once have triggered public outrage, then offer 'member prices' through loyalty card schemes that bring costs down to what used to be normal retail margins. The headline inflation figures capture only the movement in member prices, creating the statistical illusion that food costs are rising more slowly than they actually are for millions of British households.
Consider the human reality behind these numbers. A single parent working multiple jobs may not have the time, stable address, or smartphone data plan required to navigate complex digital loyalty schemes. An elderly person on a state pension may lack the technological literacy to download apps and manage digital accounts. A homeless person cannot provide the permanent address that most schemes require. All of them pay the inflated 'standard' price while politicians congratulate themselves on keeping inflation under control.
Digital Discrimination in Plain Sight
This represents a profound shift in how British capitalism operates. For decades, the basic principle of retail pricing was universal — the same product cost the same for all customers at the point of sale. Price discrimination existed, but it was typically based on volume (bulk discounts) or timing (sales events) rather than personal data harvesting and technological access.
The progressive critique goes beyond mere consumer rights to fundamental questions of equality and dignity. When essential goods are priced according to technological access and data surrender, we are not witnessing market innovation — we are witnessing the commodification of basic fairness. The message is clear: full participation in the economy now requires digital submission.
The demographic impact is neither random nor accidental. Research by Which? found that loyalty card pricing disproportionately disadvantages older customers, those on lower incomes, and people from ethnic minority backgrounds who are statistically less likely to have smartphones or stable internet access. This is not market segmentation — it is structural discrimination with a corporate veneer.
The Inflation Shell Game
The macroeconomic implications are equally troubling. When the Office for National Statistics calculates food inflation, it relies heavily on the prices actually paid by consumers tracked through loyalty schemes. This creates a statistical blind spot where the experiences of the most economically vulnerable become invisible in official data.
Photo: Office for National Statistics, via c8.alamy.com
The result is a systematic understatement of the cost of living crisis facing those least able to absorb price increases. Politicians can point to inflation figures that exclude the premium paid by the digitally excluded, while those same excluded communities face effective inflation rates significantly higher than official statistics suggest.
Tesco's recent annual results revealed that over 80% of transactions now go through their Clubcard scheme. This might sound like customer satisfaction, but it actually represents the success of a pricing strategy that makes loyalty membership economically mandatory. When the 'discount' becomes so substantial that shopping without it is financially impossible, it ceases to be a discount and becomes a penalty for non-compliance.
Regulatory Failure
The Competition and Markets Authority has shown little appetite for addressing this fundamental restructuring of retail pricing. Their focus remains on traditional anti-competitive practices — price fixing, market dominance, merger control — while ignoring how digital loyalty schemes create new forms of consumer exploitation that fall outside existing regulatory frameworks.
This regulatory blind spot reflects a deeper problem with how British institutions understand modern capitalism. The CMA's toolkit was designed for a world where prices were transparent and universal. It is poorly equipped to address business models that use data harvesting and technological barriers to create multiple price points for the same product in the same location.
Meanwhile, supermarkets defend their practices as customer choice and value delivery. They argue that loyalty schemes allow them to offer targeted discounts while maintaining revenue from less price-sensitive customers. This framing deliberately obscures the coercive element — when basic groceries become unaffordable without scheme membership, 'choice' becomes meaningless.
The Human Cost of Digital Capitalism
The real victims of shadow pricing are those already struggling with multiple disadvantages. Maria Santos, a cleaner from East London, discovered that her weekly shop at Sainsbury's had become 25% more expensive when her phone was stolen and she couldn't access her Nectar card app. She spent three weeks paying inflated prices while navigating the bureaucracy of account recovery — three weeks when every pound mattered.
Photo: East London, via www.eastlondonhistory.co.uk
This is not an edge case but a feature of the system. Digital loyalty schemes create multiple points of failure — lost phones, forgotten passwords, expired cards, address changes — that can temporarily or permanently exclude people from fair pricing. The burden of maintaining access falls entirely on the consumer, while supermarkets profit from every failure.
The psychological impact extends beyond individual transactions. When accessing fair prices requires constant digital engagement and data surrender, shopping for essentials becomes a form of surveillance capitalism. Every purchase is tracked, profiled, and monetised. Privacy becomes a luxury that only the wealthy can afford.
Beyond Consumer Rights
The solution requires regulatory intervention that treats pricing fairness as a matter of public policy, not corporate discretion. The CMA should have explicit powers to prohibit pricing schemes that discriminate based on technological access or data surrender for essential goods. There should be legal requirements for price transparency that prevent the use of inflated 'standard' prices as anchoring devices.
But the deeper challenge is political. Shadow pricing represents the normalisation of digital discrimination in essential services. It is part of a broader transformation where basic participation in economic life requires technological submission and data extraction. Fighting it means challenging not just unfair pricing but the entire logic of surveillance capitalism.
The loyalty card discount is not customer service — it is digital apartheid with a rewards programme.
