Sainsbury’s bags a bargain with ‘cut-price’ Nectar deal

Nectar-cardAimia has offloaded the UK Nectar loyalty scheme to Sainsbury’s in a £60m “cut-price” deal just over a decade after founder Keith Mills sold the business to the Canadian company for £368m.

While Sainsbury’s has made a big play of the fact the deal will allow it gain greater control of its customer data, others have pointed out that it exposes just how desperate Aimia was to get shot of the business.

The acquisition includes all assets, colleagues, systems and licences required for the full and independent operation of the Nectar loyalty programme in the UK.

A Sainsbury’s spokesman said: “One of our strategic aims is to know our customers better than anyone else and obviously having ownership of the Nectar scheme allows us to do this and it’s a great opportunity.”

At present Nectar members can collect points when spending money at Sainsbury’s but also 500 other stores including BP petrol stations, British Gas and eBay.

But the £60m price tag has been branded “chicken feed” when compared to arch-rival Tesco-owned DunnHumby, which was valued at £2bn in 2015, even though the sale eventually collapsed.

Aima has been in the wars since 2016, after being forced to implement a massive cost-cutting programme, including scrapping over 200 jobs, slashing C$40m (£19.8m) out of the business and disposing of “non-core assets”.

This was triggered by Sainsbury’s decision a year earlier to rein in rewards and restrictions on energy suppliers as well as the loss of Nectar Italia’s main retail partner, supermarket chain Auchan.

Last year, Aimia was hit by another body-blow when Air Canada – the company it was formed from – said it would bring its travel rewards scheme back in-house from 2020.

Aimia cited Sainsbury’s increasing range of products for making it harder for Nectar to operate independently of the retailer. “The evolution of the Sainsbury’s group has led to more limited prospects for Nectar to add new non-competitive partners of scale,” the Canadian group said in a statement.

Aimia’s group chief executive David Johnston added: “The transaction allows for a sharper focus on Aeroplan, our largest and most profitable business, and simplifies our operations all the while preserving a robust balance sheet for our ongoing business.”

One industry source said: “Sainsbury’s has definitely got a good deal, thanks in no small part to the situation at Aimia; £60m is chicken feed for an operation of that scale. However, it remains to be seen whether the supermarket will be able to leverage the data in the same way Tesco has through DunnHumby. That is where the real value lies. Despite the recent relaunch, the Nectar scheme still falls way short of Clubcard and even Boots Advantage Card.”

Related stories
Nectar begins relaunch blitz to push digital overhaul
Nectar slump forces Aimia into slash and burn plan
Nectar co-founder JP Lips exits firm after 20 years
Sainsbury’s cutbacks hit Nectar UK
Sainsbury’s cuts Nectar rewards
‘Farcial’ DunnHumby sale finally off
DunnHumby faces £2bn sell-off bid

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