02.Coles versus Woolworths rewards programs
According to Roy Morgan Research, an average shopper spent $156 per week in supermarkets in the year to July 2009. Based on the points awarded for this weekly shop – assuming you don’t use affiliated credit cards and other program stores – it would take almost seven years to save enough points for a Qantas Sydney-Melbourne return flight with FlyBuys – and that’s without taxes and fees. It’s a moot point, however, since the points expire after three years.
With more than six-and-a-half years’ wait time, the Virgin flight reward offered by FlyBuys is slightly better value, and includes taxes and fees (see What You Get For Your Loyalty, below). FlyBuys told CHOICE less than 1% of rewards are taken as flights. Heavy discounting by airlines has made flights so much less rewarding; who would want to wait years to earn enough points when you can now buy discounted Sydney-Melbourne return flights for less than $100?
Qantas Frequent Flyer points, available through Woolworths Everyday Rewards, only expire if there is no activity on your account for three years (18 months as of 1 July). But it will still take more than three years to get the same return flight without taxes and fees – and this is only with the classic points program, so you need to be flexible with your dates to find an available flight.
FlyBuys and Everyday Rewards programs offer shopping vouchers as well, but the return on them is equally poor. You need to spend almost $11,000 at Woolworths/Safeway, and more than $15,700 at Coles, to earn enough points for a $50 voucher. This equates to only a 50c (FlyBuys) or 70c (Everyday Rewards) discount on the average weekly shop; you’d make a much bigger saving overall simply by buying one less item, switching to a less expensive brand or going to a cheaper store.
Mind games
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, only about one in 10 Woolworths shoppers shops 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.”
Discount discrimination?
CHOICE members Ian and Marg, from Queensland, each own unconnected Woolworths Everyday Rewards cards. Marg recently received a marketing email advising that if she purchased a minimum $6 of certain MasterFoods sauces, she would be eligible for a 10c/L fuel discount. Marg purchased the sauces and got the discount at the Woolworths fuel outlet. Believing this offer would be available to all Woolworths Everyday Rewards customers, Ian also purchased the nominated products; however, when he went to the fuel outlet, no discount was available.
This illustrates how targeted marketing works. Woolworths only sent this offer to some customers – possibly those they believe are likely to be interested in buying these sauces; Marg usually does the family shopping and had purchased similar products. As Ian was not one of the selected customers, he didn’t receive the offer and it wasn’t available to him.
Woolworths told CHOICE they have received some complaints from customers, but would usually make the offer available to any customer who complained. However, this didn’t happen in Ian’s case; when he called Woolworths he was told they had complete discretion as to which customers they made any offers.