LONDON: Waitrose, the upmarket UK grocer which reported a better performance than its rivals over the Christmas shopping period, credited increased price competitiveness and its loyalty card for its success.

Unlike other supermarket loyalty schemes, the myWaitrose card is based not on points but on free gifts, money-off deals and competitions. The retailer has also recently started offering its 3.5m cardholders a free tea or coffee every day, and reported a "phenomenal" response.

Managing director Mark Price even claimed to be the second largest provider of coffee in the UK after McDonald's. He told the Daily Telegraph: "Giving free coffee or free newspapers is disruptive to the market, but I think that is what customers want, I don't think they want a point. I mean, what is a point? I think it's meaningless."

While marketers understood what he was talking about some of Waitrose's regular customers were less convinced. "Waitrose is ahead of the curve," Zoe Lazarus, partner, global insights at Lowe & Partners, told Advertising Age. "They have tapped into 'generation now'. People are tired of waiting and they are looking for everyday treats and rewards."

But one upper class customer accused the supermarket of turning its stores into soup kitchens. Notwithstanding her concerns, Waitrose said late last year that its cardholders were spending twice as much money and visiting stores 2.5 times more often than the average customer.

And Michelle Whelan, managing partner at Arc London, the brand activation arm of Leo Burnett, suggested myWaitrose was bringing in new, younger shoppers. "If people turn up for the free coffee they will become customers," she said. "It's difficult not to buy something, even if it's just an impulse spend."

The simplicity of the free coffee offer contrasts with a pre-Christmas promotion which offered a £25 voucher to spend in January to those consumers who spent at least £50 four times over a specified period.

That, said Matthew Heath, chairman and chief strategy officer at Lida, part of the M&C Saatchi Group, was "a complicated mechanic". He argued that any loyalty scheme that was not based on points needed to be clear on the benefits.

Data sourced from Advertising Age, Daily Telegraph, Reuters; additional content by Warc staff