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Is Tesco using its loyalty card scheme to prop up trading?

Jonathan Pritchard, a retail analyst at Oriel Securities, has today opened up a potentially controversial debate regarding Tesco and current trading. Aside from the fact that recent industry sales figures placed Tesco towards the bottom of the pack over the last few weeks, the company has today announced a doubling of loyalty points for members of the company's loyalty scheme which will cost the group around £200 million in total.

However, there is a feeling as we approach the end of the current financial quarter that Tesco is potentially using the loyalty card scheme, which is by far and away the most attractive in sector, as a way to shore up short-term trading and potentially mask any slowdown in growth. While this is all speculation at the moment and ultimately Tesco is unable to comment because of stock market rules, we will see over the next few weeks whether the disappointing trading pattern of the last few weeks has continued.

Tesco has until now managed to avoid putting a foot wrong and still remains at the top of the supermarket leaderboard. However, the likes of Asda, Morrisons and Sainsbury's have started to close the gap and there is no doubt that the U.K.'s leading supermarket group is under more pressure than ever before.

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