The retail sector is witnessing an all-out loyalty rewards war as major banks and grocery chains intensify their competition for a consumer base increasingly concerned with cost cutting.
With the cost of living rising and disposable incomes under pressure, retailers and financial institutions are deploying strategic loyalty partnerships to secure customer spend and long-term loyalty.
FNB’s recent expansion of its eBucks partnership with Pick n Pay marks a significant shift in the rewards space, making the retailer its primary grocery partner while severing ties with Checkers. At the same time, Standard Bank has struck a deal with Shoprite and Checkers to offer UCount Rewards members up to 40% back on purchases, alongside Checkers’ existing Discovery Vitality HealthyFood benefit. These moves signal fierce competition for consumer loyalty where every percentage point in rewards matters.
According to retail expert Lwazi Nxumalo, price perception plays a crucial role in consumer behaviour, particularly for price-sensitive shoppers. He said psychological pricing had long been used to make consumers feel they were getting better deals. However, now with rewards programmes, retailers are using loyalty incentives to drive perceived savings rather than just price points.
There are two types of consumers according to Nxumalo: consumer A, who prioritises convenience and quality over price; and consumer B, who is sensitive to price fluctuations. He said psychological pricing was likely to affect consumer B as they remained the primary targets.
The decision by FNB to move its grocery rewards to Pick n Pay aligns with its strategy to maximise savings for customers through its eBucks programme. From April, FNB Easy account holders will pay 99c for a loaf of bread, which costs almost R20, reflecting how a strong psychological pricing play reinforces affordability. On the other hand, higher-tier customers will enjoy 30% back in eBucks on Pick n Pay ASAP! purchases, a clear push to drive online shopping behaviours.
Checkers is countering these tactics with Standard Bank’s UCount rewards offering up to 40% back on the Sixty60 app, doubling down on the battle for online grocery spend.
Nxumalo warned that while discounts created immediate value for consumers, they also carried risks. He said discounting and rewards programmes worked well in driving traffic and spend, but when overused they could reshape price perception in ways that harmed brands in the long term.
When customers get used to heavy rewards, they begin to expect them permanently. The moment those incentives disappear, they start questioning the real value of the product or service, which affects brand trust, he said.
Checkers has long prided itself on transparent discounts through its Xtra Savings programme, which saved customers R16.9bn last year, Checkers said. Partnering with Standard Bank and Discovery Vitality strengthened its positioning by layering financial incentives over instant savings, it said. FNB, on the other hand, is betting on a Pick n Pay-exclusive partnership to create deeper value for its customers, effectively forcing eBucks members to shift their grocery spend.
Luxury brands, according to Nxumalo, are immune to loyalty battles as their customers buy into status rather than price incentives.
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