Shelf labels increasingly carry two prices, one for loyalty members and a higher one for everyone else. The split does work that a simple discount cannot do.
Data is the primary purchase
A discount tied to a card links every basket to a household, building a record of what is bought, how often, in what combinations and in response to which offers.
That record supports range decisions, store layouts, forecasting and negotiations with suppliers, all of which are worth more than the margin given away on individual products.
An anonymous shelf discount produces none of it. The same money is spent and the retailer learns nothing beyond how many units happened to move.
Discrimination without changing the headline
Loyalty pricing lets a retailer charge different amounts to different customers while advertising a single low price, which a straightforward markdown cannot achieve.
Shoppers who decline to join pay more, and their number is small enough that the additional margin from them partly funds the discount offered to everyone else.
It also makes comparison across chains harder, because the number quoted depends on membership status rather than being a single public figure anyone can check.
Why it raises switching costs
Points, personalised offers and member prices accumulate value inside one retailer, and none of that value transfers when a shopper moves to a competitor.
The effect is modest per visit and substantial over a year, which is precisely the pattern that changes habitual behaviour without any single decision being made.
Personalised offers reinforce it by targeting categories a household buys elsewhere, using the same data the scheme was built to collect in the first place.
What regulators have questioned
Scrutiny has focused on whether the non-member price is genuine or has been raised so that the member price looks better than it really is.
Rules on how a previous price must be evidenced apply to loyalty pricing in some jurisdictions, and the detail varies and continues to be revised over time.
Accessibility is the other concern, since schemes typically require an app, an email address and consent to data processing that not everyone can or wants to give.
Reading a member price sensibly
The useful comparison is the member price against the same product at another retailer, not against the non-member price printed beside it on the same label.
Promotions rotate, so the chain offering the best member price on one basket is often not the one offering it on a different basket a month later.
The data trade is the part that is easy to overlook, since the cost of it is not expressed in money and never appears anywhere on the receipt.