The modern loyalty card was mostly invented in Britain, around one small company.
In 1989, two married mathematicians, Clive Humby and Edwina Dunn, set up a data analysis firm called dunnhumby. In the early 1990s Tesco hired them to study a loyalty card trial in a few stores. When they presented what the data showed, Tesco’s chairman at the time, Lord MacLaurin, is famously reported to have said they had learned more about his customers in three months than he had in thirty years.
That sentence sums up the data economy, a decade early. Clubcard launched across the country in 1995 and helped Tesco overtake Sainsbury’s as Britain’s biggest retailer. Tesco bought most of dunnhumby in 2001, then all of it. Humby is credited with coining the phrase “data is the new oil”, and he was one of the first to prove it.
Where the money actually comes from
“Points for data” is the part you see. Here is what the scheme earns. None of it is hidden, and all of it is easy to ignore.
Loyalty and control over prices. Clubcard Prices shows a lower shelf price next to the normal one, for members only. Tesco can match the discounters on key products without cutting prices for everyone, and over twenty million households keep coming back, which is where every other source of money starts.
Knowledge for the shelves. dunnhumby sells analysis of what actually sells, to Tesco and to the brands on its shelves. Unilever, Nestlé and Heinz have been reported among the buyers over the years. The supermarkets say they sell findings and customer groups, not named customers. That matters, but it’s little comfort, because you are in those groups.
Retail media (selling ad space in shops and shopping apps). This is the newest and fastest-growing source. Through the Tesco Media and Insight Platform, run with dunnhumby, brands pay to show ads, in the app, online and on in-store screens, to shoppers picked using Clubcard data. The supermarket has quietly become an advertising company as well as a shop.
Reward Partners. The pages inviting you to turn vouchers into double or triple value at restaurants, cinemas and days out aren’t generosity. They’re the scheme’s partner business. The partners get customers. Tesco gets someone else to pay part of the cost of your loyalty, while you thank Tesco for the day out. Everyone involved is paying with something, and it all started with your shopping basket.
The same approach crossed the Atlantic. When Tesco tried to sell dunnhumby in 2015, the US grocer Kroger bought out their American joint business and turned it into its own in-house data company, 84.51°. It’s the Clubcard system’s direct descendant, running on American shopping.
What a basket gives away
A shopping history sounds boring, but guessing from data is the whole point. What you buy shows your household size, your rough income, your diet, your pets, and your habits getting better or worse. The best-known example is American. In 2012 the New York Times reported that the retailer Target scored shoppers on how likely they were to be pregnant, based on changes in what they bought. Baby product coupons reached one household before a teenage daughter had told her father.
Nobody at the till asks if you’re pregnant. The basket answers anyway. With shopping data, you can’t keep back what you never said.
- 01you scan the cardpoints go on, pence come off: the part of the deal you see
- 02the basket is recordeditem by item, trip by trip, store by store, for years
- 03the record is analysedhabits, household and life events, worked out from what you buy
- 04access is soldbrands and advertisers pay to reach the groups you are in
The same four steps run behind every free app, with no scan, no discount, and no sign at all that it is happening.
Not just Tesco
This is how the whole industry works, not one company. The interesting part is how each retailer’s own documents describe it.
Lidl Plus gets rid of the card completely. The member prices live in an app, so you can’t get the discounts without a profile. Lidl’s own UK privacy notice says your purchases are added to your customer profile and your buying habits are analysed. Its data protection policy goes further. It describes uploading lists of user data to Facebook’s Custom Audience system to target ads, with Facebook also using the data for its own purposes. So a discount supermarket’s till is connected to Meta’s advertising system.
IKEA Family looks gentler, with member prices and digital receipts, but it works in a similar way. IKEA’s own policy says it collects your purchase history whenever you show you’re a member. It uses it to study your shopping, sort customers into groups and tailor offers. The free hot drink has a record behind it too.
And Sainsbury’s does the same with Nectar, including its own retail media business. Once you see the pattern (profile, analysis, groups, paid access), you see it at every checkout.
In fairness: the card deal is real
The supermarkets deserve some defence. For years people suspected member prices were a con. In November 2024 the UK’s Competition and Markets Authority (the CMA, which polices competition and consumer law) published its review of around 50,000 grocery products with loyalty prices. It found that 92 per cent gave real savings against the normal price, averaging 17 to 25 per cent. There was very little sign of “normal” prices being pushed up to fake the discount. The CMA also looked at the data collection and found no breach of consumer law.
So the trade is real. You’re paid in actual money, at a rate you can see, by a named company, under UK data law. You also have the right to ask what they hold and to leave. As data deals go, it’s surprisingly close to fair.
That’s exactly what makes it a useful yardstick.
The same trade, without the till
Now compare a free app with that.
There’s no scan. Collection is constant and invisible. There’s no discount shown: you’re paid with use of the app, at a rate nobody states. The buyers aren’t named, and your data passes through a chain of advertising firms you couldn’t list. And there’s no checkout where you can quietly say no. Your only choice is to take the app, tracking included, or leave.
We knowingly accept a visible trade worth a fifth off the shopping. Meanwhile the hidden version of the same trade runs all the time, pays us nothing we can count, and involves companies we can’t name. Yet what little anger there is tends to fall on the card, the one player that was open about it.
Where that leaves you
You probably won’t cut up your Clubcard. Knowing the price, you may decide it’s worth paying. That’s what informed consent looks like, and it’s fine.
The useful habit is to use the till test on everything else. What’s being scanned here, what’s the discount, and who’s playing the part of dunnhumby? If an app can’t answer those three, you’re still in the deal, just on the losing side. And for more and more everyday tools there’s a third option the supermarket can never give you: run the tool yourself, and there’s nobody on the other side of the deal at all.
The problem was never that you swapped your shopping history for a discount. It’s all the others who took the same kind of history and paid you nothing, while the card quietly taught us all that this was normal.