Coles and Woolworths step up war over loyalty programs

Andrew MacDonald
May 15, 2012
The Courier-Mail

QUEENSLAND consumers are set to save as the ongoing supermarkets price war pushes further into loyalty program territory.

While debate continues over the true benefits of the offers, consumer groups say shoppers can achieve better value for money if they play to the strengths of each scheme.

Woolworths has fired the latest salvo through its Everyday Rewards program, further escalating the tit-for-tat discount competition with Coles which began with milk and bread.

Under changes announced this week, members are entitled to discounts of at least 20 per cent on “hundreds” of marked items, from “bread, butter, biscuits or batteries”, selected by Woolworths each week.

The latest move comes just weeks after main rival Coles hired British comedian Dawn French for the high-profile re-launch of its FlyBuys program.

CHEAP bread and milk prices will continue indefinitely, Coles has announced on the eve of the first anniversary of the grocery price wars.

Under changes to that scheme, the “my5” offer gives FlyBuys customers 10 per cent off five products of their choice when they spend at least $50.

Points earned through buys can also be used at Coles-affiliated stores and for flights and holidays through Webjet.

A Woolworths spokeswoman refused to confirm the changes to its rewards program were a direct response to Coles.

“This is just supposed to simplify the tailored offers we’ve already been giving people,” she said.

Spokeswoman for consumer advocacy group Choice, Ingrid Just, said both programs had potential benefits for customers.

“It’s good to see that Woolworths is working hard for our dollars and it’s good to see there is no minimum spend, unlike Coles.

“But, as with all these loyalty programs, the main motivator for rolling them out is to pervert our natural inclination which is to look for the best deal among all of the supermarkets,” she said. “Obviously a point of difference between it (Woolworths) and Coles is that it is the company itself which determines which items it will be applying the heavier discount on, unlike the my5 where the customer decides.”

Ms Just said consumers would be better advised to use the my5 program to purchase regularly used costly items and stock up on heavily discounted non-perishables through the Woolworths offer.

She added that while the heavy discounting could benefit consumers in the short term, the ongoing pricing competition could place further pressures on smaller retailers and ultimately lead to reduced competition.