Making personalization profitable: Loyalty lessons from two UK retailers
In many ways, the Canadian retail environment is as challenging as it’s ever been. Supply chain disruptions and rising costs are already straining businesses—and the new tariffs recently imposed by the current U.S. administration are likely to intensify these pressures even further. Cost-of-living challenges persist, and as a result, consumers are more selective than ever about where they shop. What has always been a margin-constrained sector is being further squeezed by these macroeconomic trends.
Loyalty strategies may not be able to solve every challenge grocers face, but they can be a powerful lever for stability and growth. When thoughtfully designed to deliver value, reflect individual shoppers’ needs, and maximize omnichannel engagement, they can help grocers retain price-sensitive consumers, differentiate themselves from competing retail brands, and drive profitability.
Canadian consumer challenges continue
After months of stabilizing inflation, Canadians are experiencing another recent surge in prices, with overall food costs (including groceries) rising 3.2% year-over-year in March, up from 1.3% a month earlier. This unexpected increase has jolted household budgets already stretched thin.
This monthly increase corresponds with Canada's Food Price Report 2025, which forecasts a 3% to 5% increase in food prices this year. According to the report, the average family of four will spend $16,833.67 on food. That represents an increase of over $800 from 2024, forcing consumers to make difficult choices about their grocery spending. For Canadian grocers, that means striking the right balance between providing value to retain customers and maintaining sustainable margins. While it may be a complex task, it’s achievable with the right strategy and focus.
Personalization promotes value—and results
Connecting with consumers in the right place at the right time is critical, and personalization enables grocers to do exactly that. But how can they achieve the next level of personalization that will really move the needle in terms of ROI? Our 2023 report, Grocery's Great Loyalty Opportunity, which examined the intersection of cost-of-living challenges, loyalty, and the global grocery retail sector, found that personalization is what shoppers want: 69% rank "value" as the top loyalty program benefit, and 84% believe that personalized recommendations will help them save money.
Loyalty programs that can deliver value and tailor that value to individual shoppers can increase customer retention and boost financial performance. By offering relevant deals and promotions based on shopping history and preferences, grocers can create a more compelling value proposition for their customers.
UK supermarket chain Tesco offers an excellent case study in how loyalty-integrated personalization initiatives can support business performance. For more than three decades, Tesco has made loyalty a strategic priority, resulting in the massively popular Clubcard program and reward ecosystem. The retailer integrates loyalty into many of its key workflows, including in-store staff engagements to drive sign-ups at checkout. Tesco has also never shied away from innovation, most recently through its AI-powered Challenges initiative that delivers personalized customer experiences at massive scale.
Tesco introduced Clubcard Challenges in May 2024 based on a simple concept: participants could earn up to £50 in Clubcard Points by meeting personalized spending thresholds. Aligned with major events like the Olympics and Christmas, the initiative helped Tesco achieve what it called its "strongest Christmas performance ever."
This personalization strategy has delivered impactful results for Tesco. During the final, Christmas-themed Challenges campaign of 2024,10 million customers received their own personalized set of Clubcard Challenges, with 76% of site visitors converting to active participants. Among players, 62% reached the first reward threshold, collectively earning over half a billion extra Clubcard points.
Another UK retailer, ASDA pursued a unique approach to personalization by building its own loyalty program, ASDA Rewards, from the ground up following its exit from the Walmart group. ASDA Rewards features real-time tracking of customer interactions across all touchpoints, delivering a single customer view, and built-in gamification capabilities. Amassing more than 6 million members within 18 months of its launch, ASDA Rewards is a key component of the retailer’s broader strategy to enhance customer engagement and drive long-term value. As a result, the scheme is now linked to 49% of total sales.
Following the pathway to personalization
The success of Tesco’s and ASDA’s personalization strategies offers valuable lessons for Canadian grocers. Programs like Clubcard and ASDA Rewards create a virtuous cycle: better data leads to more personalized offers, which drive increased digital adoption and generate more actionable data. This continuous improvement process allows retailers to refine their approach over time, creating an increasingly valuable proposition for both customers and the business.
To implement a similar approach, grocers should focus on building robust data infrastructure that can capture and analyze customer behavior across all touchpoints. Retailers should also invest in technologies that enable real-time personalization, allowing them to deliver timely and relevant offers to customers. This might include mobile app notifications, at-the-till communications, personalized weekly offers, or even personalized health and wellness based incentives and rewards.
As economic pressures continue to mount, the grocers that effectively understand and address individual customers will be best positioned to protect their profitability. The performance of Tesco’s and Asda’s personalization efforts demonstrates the significant potential of this approach, offering a blueprint for what’s possible when the right strategy is in place.
About the author
Joel Percy is an experienced Loyalty and CRM executive with deep expertise in retail personalization and data monetization. At Loblaw Companies in Canada, he helped design, launch and run PC Plus, one of the world's first fully personalized digital rewards programs. He has also consulted with retailers around the globe on the design of personalized marketing programs. He is currently the Regional Director at Eagle Eye, where he helps clients grow loyalty and drive sales by building digital connections with their customers. You can find him on LinkedIn.
