In October, Woolworths announced that it was ending its long-term arrangement with Qantas, whereby shoppers using the Woolworths Everyday Rewards card were able to accumulate Qantas Frequent Flyer points.
In mid-December Woolworths announced that it had changed its mind – and rather than ending the Qantas association it unveiled a new Qantas deal, whereby shoppers, from mid-2016, will be able to convert $10 Woolworths dollars onto 870 Qantas points.
So what does this all mean for shoppers?
What are the supermarket rewards programs?
Currently, Coles and Woolworths both offer rewards programs for loyal customers. Coles has the FlyBuys program, whereby shoppers can accumulate points and redeem for cashback or goods and services. See what Coles Flybuy points offer here.
Until recently, Woolworths offered the Everyday Rewards program, which allowed members to earn one Qantas point for every dollar spent over $30 in-store and online.
Canstar has crunched the numbers on the original rewards programs to determine that on the base earning rate, customers spending around $250 per week with Coles or Woolworths could expect the following yearly value of rewards:
|FlyBuys||Woolworth Everyday Rewards|
|Source: Canstar.com.au, based on a single $250 per week grocery spend. Flybuys redemption based on POS redemption at Coles, Woolworths based on an average points currency for 6 flight routes.|
Keep in mind, of course, that smart shoppers can earn above the base rate and it’s worth noting that Coles research has found that the average earning rate per customer is more than 2 points per dollar spent. How do customers earn more? For example:
- frequently offer triple points on your largest spend
- offer bonus points for buying specific items
- auto redemption at point of sale
- offered bonus points for spend above a $ in one shop
- Was able to be aggregated to a Qantas Frequent Flyer account by customers with a Qantas credit card
The original Woolworths Rewards announcement
In October 2015, Woolworths announced that instead of frequent flyer points, customers would now accumulate grocery discounts buy buying orange-ticketed items, with Woolworths determining that discounts are the most sought after reward.
According to the Monash Business School, the earning rate on the new rewards program is approximately $10 of discount for every $792 of spending. Assuming a weekly spend of $250 (as per our table in the above section), it appears that the new rewards program could be reasonable value, with households likely to receive $10 in discounts every 3 – 4 weeks.
The additional Woolworths announcement
In mid-December, Woolworths announced that Woolworths Rewards and Qantas Frequent Flyer members will be able to convert Woolworths Dollars into Qantas Points. The new agreement will give customers the choice to convert their Woolworths Dollars, earned through buying orange ticket products, into Qantas Points at a conversion rate of 870 Qantas Points for every 10 Woolworths Dollars.
Between 1 January 2016 and the launch of the new option, customers who previously earned Qantas Points via Woolworths Rewards will receive regular bonus Qantas Points offers. Those with a Qantas Frequent Flyer-linked credit card will continue to earn points each time they shop at Woolworths.
According to Woolworths, around half of all Everyday Rewards members were linked to the Qantas Frequent Flyer Program and of those around 32% had not redeemed points for flights or other goods during the life of the program. The key features of the new Woolworths program are:
- Minimum $30 spend to earn Qantas Points removed.
- Customers earn Woolworths Dollars as a default option of the Woolworths Rewards (rather than Qantas Points).
- Customers selecting the Qantas Points option will nominate to automatically convert their Woolworths Dollars into Qantas Points at a rate of 870 points for every 10 Woolworths Dollars.
- Applies to Woolworths Dollars earnt at Woolworths Supermarkets and BWS stores.
- As previously announced, Woolworths customers will continue to automatically earn Qantas Points until 31 December 2015, when current agreement expires.
- New scheme will take effect during the first half of 2016, with more information provided to members before it goes live.
- Between 1 January and the new scheme taking effect, customers who previously earned Qantas Points via Woolworths Rewards will receive bonus earn offers, so they can continue to grow their points balance when shopping at Woolworths.
Would a change in rewards change your shopping habits?
According to Woolworths, only 9% of customers were chasing frequent flyer points by shopping at Woolworths, compared to 68% that want cheaper groceries.
Canstar Blue research suggests that the rewards-focussed customers could be more plentiful. According to Canstar Blue research of more than 2,000 shoppers, a hefty 72% of us tend to shop at the one supermarket chain, and 15% of us do so because of the rewards on offer. A change in rewards could well equal a change in consumer behaviour.
Rewards or not though, Woolworths is correct that price remains a key driver of our supermarket shopping behaviour, with Canstar Blue finding that 71% of us pay attention to special offers and supermarket price wars and 46% of us preferring supermarket private-label brands. Perhaps ominously, 23% of survey respondents said that they had started using a different supermarket chain over the past twelve months, with saving money being the main reason for doing so.
It will be interesting to see what happens.