Just how exactly much do you get out of a typical rewards program? Not nearly as much as the companies behind them do. Most of these programs offer such poor rewards that you generally save less than a dollar per $100 spent.
In return, retailers gain valuable information about your shopping habits. Sophisticated databases store information on the specific products you buy, which could show if you smoke, prefer organic produce, choose low-cholesterol margarine or have a preference for certain snack foods. This can then be used for targeted marketing.
Another downside to joining a rewards program with one retailer, which may discourage you from going to another shop, is that you’ll miss out on specials offered by competitors because you’re shopping exclusively at either Coles or Woolworths to maximise your points in a reasonable period of time.
According to Roy Morgan, in 2009, only about one in 10 Woolworths shoppers shopped exclusively at Woolworths, with even fewer loyal Coles shoppers. Dr Paul Harrison, Senior Lecturer in Consumer Behaviour and Advertising at Deakin University, told CHOICE that loyalty programs are designed to rectify this low store loyalty. “A loyalty program creates a barrier, which makes it harder, psychologically, for the consumer to shop somewhere else,” he said. “Ultimately, the supermarkets are trying to create an unconscious response, so it just becomes easier for the consumer to shop, for example, at Woolworths, rather than at Coles. Because it is unconscious, the consumer may not be aware of its effect.”