why do shops like tesco promote memberships (like clubcard) that produce prices? wouldn’t they just lose money?
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The idea is that if you have a membership card, you are more likely to do your shopping at Tesco. Groceries are a commodity product – milk at Tesco is basically the same as any other store, so you have no reason to be loyal to any given store. If they can convince you, via the card, to do all of your shopping at Tesco they will make less profit per item, but more total profit because you spend more money with them in aggregate; I’d rather you spend $100 with me at a 10% profit margin ($10) than $50 with me at a 15% profit margin ($7.50).
They also get a data stream. Since you use your card with every purchase, they know what **you** are purchasing, which is valuable information to CPG companies when determining what products to produce and what prices make sense.
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