The Australian supermarket landscape is highly competitive, especially when it comes to customer loyalty.
With Woolworths and Coles boasting 1,111 and 846 stores, respectively, the rivalry is not just about pricing and product quality but also their robust loyalty programs aimed at keeping customers engaged and returning for more. But how do these schemes measure up against their global counterparts?
Woolworths' Everyday Rewards is primarily tied to its supermarkets, BWS liquor stores, and Caltex Woolworths fuel stations. It allows customers to collect points that can be converted into store discounts or Qantas Frequent Flyer points. Coles' Flybuys program includes retail siblings like Kmart and Target.
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Both programs offer one point per dollar spent and send personalised promotions through their apps or via email. Accumulating 2,000 points in either program translates to a $10 voucher, providing a 0.5 per cent return on spending. While these programs have streamlined the reward mechanisms, they fall short of their international rivals in terms of value returned.
Setting the global benchmark: The UK & Ireland
Tesco, the UK's retail behemoth with 4,752 stores, offers a more lucrative loyalty program. While shoppers only earn one point for every £1 (equivalent to roughly $2) spent, 500 points can be exchanged for a £5 voucher, yielding a 1 per cent return. Through special partnerships with restaurants and entertainment venues, the value can be doubled.
Not to be outdone, Boots, a leading UK pharmacy chain, offers a 3 per cent return. Customers accumulate three points for each pound spent, with £500 in spending translating to £15 in redeemable vouchers.
Perhaps the most generous loyalty program globally comes from Ireland's Dunnes Stores. The "Shop & Save" program gives customers a €10 voucher for every €50 spent on groceries, capped at three vouchers. This results in a much larger 20 per cent return, although the vouchers have a nine-day expiration period and are subject to minimum-purchase requirements.
In the US, both Ralphs and Walgreens offer a 1 per cent return on customer purchases, while New Zealand's Woolworths-owned Countdown provides a 0.75 per cent return - which is 50 per cent higher than their Australian offering.
Interestingly though, Australian programs outperform those in the Philippines, where returns from loyalty programs at SM Markets and Robinsons Supermarket hover around 0.2 per cent and 0.25 per cent, respectively.
The trade-off: Your data
It's worth noting that, while loyalty programs offer consumers various perks, they also function as data repositories for retailers, enabling them to conduct targeted marketing that can be surprisingly predictive. Those who want to keep their data private may want to steer clear.
The future will likely see these loyalty schemes evolving to be more rewarding. But, even if you decide to stay out due to data-privacy concerns, both Woolworths and Coles still offer fuel discounts at selected stations, with no loyalty card needed.
While Australian loyalty programs have made strides in becoming more transparent and somewhat more rewarding, there's ample scope for improvement. If Woolies can offer 0.75 per cent return to their New Zealand customers, there is no reason they can’t improve on the 0.50 per cent return in Australia. The 20 per cent returns enjoyed by Dunnes Stores customers in Ireland, however, will remain a pipe dream.