Nectar in driving seat as Sainsbury's eyes 'Next Level'

Sainsbury’s has vowed to continue to build on its Nectar loyalty programme in the next three years, offering “more personalised, rewarding and integrated loyalty and market-leading retail media capabilities” as part of a strategic shake-up designed to boost profits and cut costs by £1bn.

The supermarket giant is already under investigation as part of a Competition & Markets Authority review into loyalty scheme pricing but says Nectar will play a crucial role in its plans for “Next Level Sainsbury’s”.

The company said that over the next three years it will decrease its general merchandise and clothing space but increase its food offering and investment in technology and artificial intelligence, although this could also result in job cuts.

It maintains that Nectar has delivered ahead of its plan and is playing an ever-larger role for customers and within its business.

Sainsbury’s added: “The launch of Nectar Prices has transformed Nectar sales participation, customer recognition of the value that Nectar provides and value perception more widely, with customers saving an average of £12 off a weekly £80 shop by shopping our Nectar Prices. We now have more than 16 million digital subscribers and will invest further in the Nectar app, continuing to build engagement with the Nectar proposition and driving greater loyalty.

“Nectar’s personalised offers, including Your Nectar Prices, are world-leading in their scale, generating over 260 million different personalised offers each week. More than one million customers shop using Your Nectar prices every week. Your Nectar Prices is currently available to online and SmartShop customers and we will roll this out more widely.

“We will further invest in the integration of Nectar across all of our digital platforms and into payment solutions and we will continue to build our coalition of strong partners like British Airways and Esso. This will build stronger digital engagement and deliver even more value to Nectar customers.”

The supermarket claims that Nectar360, which operates the Nectar coalition and manages Sainsbury’s and Argos retail media services, is well positioned within the UK retail media market, with scaled first party data and deep media capabilities. It now serves over 870 clients directly and has built partnerships with the key agency groups.

The company, which said it plans to expand its team and unifying capabilities across instore, onsite and offsite, is now forecasting an incremental £100m of Nectar360 profit contribution over the three years to March 2027 (previous guidance was £90 million over the four years to March 2026).

Sainsbury’s chief executive Simon Roberts said: “While I’m proud of the progress we’ve made to date, we’re only just at the beginning of rediscovering quite what this business is capable of. By taking Sainsbury’s to the next level, delivering for customers and colleagues, we will also deliver enhanced returns for shareholders through a share buyback and committing to a progressive dividend.”