Coles unveils Virgin Velocity partnership

Coles is taking on Woolworths, announcing a new partnership between Flybuys and Virgin Velocity

With Woolworths announcing its revamped rewards program back in August, all eyes have been on Coles, which has now announced a partnership with Velocity to exchange Flybuys for Velocity points.  Members of Coles’ flybuys loyalty scheme can swap points earned at supermarkets, service stations and with other partners for Velocity Frequent Flyer points that can be redeemed as flights or upgrades.

So how does it compare to the Woolworths/Qantas deal? Here’s a quick overview:

Coles/Virgin

flybuys-logo

Woolworths/Qantas

woolworths-rewards-logo

1 point per $1 spending 1 point per $1 spending
2000 Flybuys points turns into 870 Velocity Frequent Flyer points 2000 Woolworths points = 870 Qantas points
Up to 60,030 Velocity points per year No cap on points that can be earned
2,000 points = $10 off shopping 2,000 points = $10 off shopping
Bonus of 15% applies to transfers, so 2000 Flybuys points = 1000 Velocity points (until 30/11) No current bonus on transfer
Up to 10 Velocity Status Credits can be earned per month (1 credit per $100) No equivalent
Points earned for supermarket spending, alcohol & petrol Points earned for supermarket spending, alcohol & petrol
Flybuys = approx. 27 partnerships Woolworths Rewards = approx. 4 partnerships

 

One form of competitive difference is that Coles shoppers can earn up to 10 Velocity Status Credits month on top of the Velocity Points. As background, status Credits allow Velocity members to move up through the ranks of the frequent flyer program, to receive benefits from the airline such as lounge access, priority boarding, extra baggage and fast point earning.

120 Status Credits per year is just less than half the 250 required to move to the first rank – Velocity Silver. One of the most tangible benefits of Velocity Silver is two single entry passes to Virgin Australia lounges.

Another advantage is the number of flybuys partners, reflecting the longer tenure of flybuys.

“flybuys has more partners than any other Australian supermarket loyalty program,” said General Manager of flybuys Adam Story.

“That means we give flybuys members more opportunity to collect points faster, not just by shopping for groceries at Coles, but also by paying for everyday expenses such as fuel, clothing, homewares, energy bills, car, home and health insurance and gym memberships with one of our partners, and on all spending on a Coles or NAB flybuys credit card.”

When it comes to earning that flight, customers do need to spend a significant amount of money on eligible purchases if they use the base earning rate as a guide.

Here’s what you would need to spend under each program for a one way flight from Sydney to Melbourne, only earning the base level of 1 point per $1:

Woolworths Points Coles Flybuys points
Points per dollar spent 1 1
Frequent Flyer transfer rate 2,000 Woolworths points = 870 Qantas Points 2,000 Flybuys points = 870 Velocity Points
Sydney to Melbourne One Way Flight Cost 8,000 Points + $34.18 taxes 7,800 points + $21.11 taxes
Supermarket Spend Required $18,391 $17,931

Source: www.canstar.com.au 

 

Mr Story was quick to point out, though, that savvy shoppers can do much better.

“flybuys members are regularly earning generous bonus points offers to accelerate their rewards – for example, flybuys is currently offering rewards of up to 20,000 bonus points for shopping at Coles. Right now, flybuys members have enough points to transfer to Velocity Frequent Flyer and redeem millions of flights with Virgin Australia,” he said.

Whether a new rewards program will entice Woolworths or ALDI customers into Coles store remains to be seen, with Canstar research finding that the attraction of rewards as a customer loyalty tool is on the wane. Canstar’s 2012 survey of more than 2,200 supermarket shoppers found that 56% were loyal to their supermarket because they liked earning rewards points. By 2016 that percentage had dropped to just 38%.

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