Nectar profits collapse as supermarket price war takes its toll on loyalty cards

Billy Bambrough
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Nectar runs the loyalty card scheme for supermarket Sainsbury's (Source: Getty)

Profits have tumbled at Britain’s biggest loyalty card provider, Nectar.

Aimia Coalition Loyalty UK, Nectar’s parent company, said that pre-tax profits fell to £14.1m for 2014, from £74.4m the year before, due to a rise in people cashing in their points, while collecting fewer.

The company warned that if people continued to redeem points then profits could be hit again. Revenue however rose to £310m in year to December 31, 2014, up from £298m, according to accounts filed at Companies House.

The fall in profits was blamed on tough competition in the grocery and energy markets, which caused Nectar powerhouse Sainsbury's to halve the number of points a customer receives per pound spent from two to one in April.

Supermarkets have been under pressure to utilise loyalty schemes to prop up falling sales as customers flock to discounters Aldi and Lidl.

Britain’s biggest grocer Tesco recently abandoned plans to sell its data arm Dunnhumby, which powers its 16m member Clubcard business. due to no suitable buyer being found. Nectar has about 19m card holders in the UK.

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