By James Davey

LONDON (Reuters) – Sainsbury’s, Britain’s second-largest supermarket group, on Tuesday began offering lower prices on more than 300 items to the 18 million members of its Nectar loyalty scheme, rivalling a similar initiative at market leader Tesco.

Dominated by Tesco and challenged by German discounters Aldi and Lidl, Britain’s supermarket sector has been marked by fierce competition and low margins for decades.

Loyalty cards have become a key focus for food retailers as they seek to attract and retain customers amid rampant grocery inflation, which hit a record 17.5% in March, according to industry data.

Tesco’s “Clubcard Prices” scheme has proved particularly popular, while No. 3 grocer Asda introduced a new loyalty scheme last year.

Sainsbury’s’ “Nectar Prices” scheme offers discounts on items including household products, pet food and confectionary when members scan their Nectar app or swipe their card at the supermarket checkout, or if shopping online link their Nectar and Sainsbury’s accounts.

Initial deals include a can of Heinz baked beans for 95 pence ($1.18) instead of the usual price of 1.40 pounds, a jar of Nescafe Gold Blend coffee for 4.00 pounds instead of 8.10 pounds and Kellogg’s Crunchy Nut cereal for 3.75 pounds instead of 4.80 pounds.

“We will keep refreshing Nectar Prices and increasing the variety of products on offer,” said Sainsbury’s CEO Simon Roberts.

Nectar members will continue to earn points for purchases which can be spent either at Sainsbury’s or with partners.

The new initiative builds on a scheme launched in 2021 that saw Sainsbury’s offer lower prices to Nectar members using its “SmartShop” self-scanner service.

Monthly industry data has shown Sainsbury’s performing solidly versus rivals, though it is still losing market share to Aldi and Lidl.

Sainsbury’s is scheduled to report full year results on April 27. Tesco is due to report annual results on Thursday.

($1 = 0.8051 pounds)

(Reporting by James Davey)

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