Canada groceries: Members-only pricing at Loblaw stores angers Canadian customers — ‘shouldn’t be allowed’

A social media post slamming Canada grocery giant Loblaw for selling items at a deep discount for members of its Optimum loyalty program has gone viral. Though a common practice, Canadians voiced their concerns with some suggesting “it shouldn’t be allowed.”

The post on X, formerly known as Twitter, shows a box of assorted chocolates at a Loblaw-owned store being sold for $21.99. The same box is offered at $12.99 for PC Optimum members.

“This isn’t a discount for members,” writer David Moscrop posted on Twitter. “It’s a tax for non-members because Loblaws wants to harvest your data.”

The post has been shared more than 600 times and viewed by more than 100,000 users.

PC Optimum is the loyalty program for Loblaw-affiliated stores like Shoppers Drug Mart, Loblaws, No Frills, Real Canadian Superstore and Zehrs. Customers collect points on purchases and are given bonus points on a custom selection of products based on past purchases. Points can be redeemed for dollars off their total bills starting in $10 increments.

Membership pricing is a popular practice where shoppers sign up for loyalty plans, which entitle them to member-only deals and points towards discounts. And while many consumers can reap the benefits and rewards from these programs, experts warn these types of memberships have the potential to alienate some shoppers, and should face regulatory intervention.

Exclusion of non-members can create ‘negative reaction’

Earlier this year, members of a Reddit community called “Loblaws is out of Control” organized an ongoing boycott of Loblaws and its affiliated stores, in an attempt to tackle food inflation and soaring prices on everyday essentials. Part of the initial demands of the boycott included putting an end to exclusionary Optimum member-only pricing on everyday items. While the boycotters’ demands have since been updated, some experts note that aspects of member-only pricing can be problematic.

David Soberman is a professor at the Rotman School of Management at University of Toronto. He says the extreme discrepancy shown in the viral X post about the box of Halloween candy is a good example of how members-only pricing can backfire on a company.

“When you can pay a lower price by becoming a member, that’s a good way of selling a program,” he tells Yahoo Canada. “But if you tell people, ‘You have to pay more because you’re not a member’, that’s a way to create a negative reaction.”

Tim Hortons app was found to be ‘mass invasion’ of privacy

He adds that frequent customer programs are valuable to companies not just because they have customers’ loyalty but because they provide a lot of useful data on buying patterns. In turn, the data is often used to target customers based on their buying habits.

“When they have data on you, they’ll send ads that are of interest to you,” he says. “Good marketing is based on using good information that is used to create value for people. If you think of it that way, you can benefit from the data companies collect from you.”

Sometimes the use of customer data has proven to be questionable, as with the case of Tim Hortons. In 2022, federal and provincial privacy commissioners found that the company’s app tracked and recorded customer’s movements, which they deemed to be “a mass invasion of Canadians’ privacy”.

Markus Giesler is a professor of marketing with the Schulich School of Business at York University. He says loyalty programs are a way for companies to collect as much information about their customers as possible, while turning the shopping experience into a game.

“The more that happens…the more interesting that is for companies to target us for new messaging, new products and services and experiences,” he says. “All the while, we as consumers willingly participate, because isn’t it exciting to collect points? This experience is highly gamified.”

He adds that consumers should be aware that these programs aren’t really about our loyalty, but about our data and how much we share. And while customers should educate themselves about how their data is used, Giesler says that can only get customers so far.

He says more should be done legislatively to protect Canadians and how their data is used.

“Companies should be monitored and supervised in some form or another on how far reaching this data is,” he says. “We should also put some boundaries around these kinds of things through policy and legislation so we as consumers can navigate this fulsomely without some form of regulatory intervention.”

Canadians react to member-only pricing at Loblaws: ‘Shouldn’t be allowed’ on essentials

Some on the X post shared that they’re happy to provide their data to companies if it means having access to better deals.

“I hate Loblaws but I admit I like the data collecting program.” The Lefty Canadian Radical wrote. “Easy ways to game it if you price match and use coupons with their offers, it’s like getting free money.”

Others felt membership pricing should be excluded from essential grocery items.

“I don’t think it should be legal to charge higher prices for non members for essentials like staple groceries,” E400wagon wrote on a Reddit thread where the tweet was posted. “ I saw this type of promotion for flour and it shouldn’t be allowed.”