Coles slams Woolies as the supermarket giants face off over loyalty rewards

COLES has hit back at Woolworths after its attack on Flybuys, as the retailers face off in their battle over Australia’s $90 billion groceries market.

flybuys in hand

COLES has hit back at Woolworths after its attack on Flybuys, as the retailers face off in their battle over Australia’s $90 billion groceries market.

Loyalty points are the latest front in the supermarket war, with Woolworths claiming that its new scheme will reward members twice as quickly as Coles’ Flybuys.

Instead of earning Qantas frequent flyer points, from tomorrow Woolworths Rewards customers will save cash at the till — a response to “points fatigue”, a perception that it takes too long to earn meaningful rewards through traditional schemes.

Instead of points, “Woolworths dollars” will be earned on goods marked with an orange ticket at Woolies supermarkets and BWS stores. Qantas Frequent Flyer points will be phased out by December 31.

The supermarket giant has dared to suggest that members of its new scheme will be rewarded twice as quickly as those with Coles Flybuys, citing research by it commissioned from Monash Business School.

This analysis found the average grocery shopper, spending $108 per week, would earn a $10 reward roughly every 7.4 weeks — less than half the time it would take to earn the equivalent reward from the Coles Flybuys scheme.

But Coles has hit back, pointing out that Woolworths Rewards will only apply to certain supermarket items, while the Flybuys scheme is broader.

“At Coles, Flybuys members earn rewards on every dollar they spend in our supermarkets and fuel and liquor stores — not just the specific products we want them to buy,” general manager Flybuys and loyalty Adam Story said.

“When redeeming their points, members can also choose from hundreds of reward options, including using Flybuys dollars to pay for their shopping or to receive gift cards, products, lifestyle experiences and travel. Our members clearly tell us that they want choice of rewards so they can redeem when and how they choose.”

He pointed out that Flybuys rewards could be accrued when shopping with 27 partners including Kmart, Target, AGL, Telstra, OPSM, Medibank and NAB.

“This is a major way our members accelerate their points earnings which is not reflected in the calculations in the report,” Mr Story said.

“Our analysis shows that Flybuys members are earning $10 worth of Flybuys points in less than six weeks.”

He said the average Flybuys member also earned more than two points per dollar spent at Coles.

Coles Flybuys also has a new partnership with Etihad Airlines.

Woolworths is taking a big gamble by ditching its frequent flyer scheme. Picture: Cameron Richardson

Meanwhile, a number of Woolworths customers have taken to social media to express their displeasure at the ditching of Qantas frequent flyer points.

‎Louise Kaloudis wrote on the supermarket’s Facebook page this morning that if the change goes ahead, “we will be changing supermarkets!”

‎Jason Young‎ wrote: “Really Woolworths? Have you lost the plot altogether? Your new system will only be giving me credit on items which take up just two [pages] of your 40-page catalogue ... At least with Coles, every item counts and I can buy what I want, not what items you want me to buy that I didn’t want in the first place.”

Mr Young said the main reason he and his friends shopped at Woolworths was to earn frequent flyer points.

“We were actually saving ours up so the whole family can go together on a holiday,” he said.

“It will take more than a year to do that — Did you think about that?”

Woolworths Food Group Managing Director Brad Banducci said the new Woolworths Rewards scheme allowed customers to “just shop as normal and the rewards look after themselves”.

“It’s 100 per cent relevant to 100 per cent of our shoppers, totally automatic and hassle free,” Mr Banducci said.

He said market research showed a majority of customers favoured discounted grocery bills over points schemes.

Deutsch Bank has reportedly estimated that the scheme will cost Woolworths a whopping $500 million.

Canstar Blue finance editor Justine Davies said based on a $250 spend a week for the average family, Woolworths Rewards offered more value than the Coles Flybuys scheme.

“On face value, the new Woolworths scheme could deliver twice as much benefit as Coles’ Flybuys,” she said.

“For a $250 dollar spend a week, $13,000 a year, you expect to receive about $65 back per annum. With Woolworths Rewards, you would be spending about $6,500 to get that $65, so essentially you should get twice as much back as the Coles Flybuys.”

Ms Davies said that, depending on how the new scheme was rolled out, it would likely take more than three weeks for the average family to receive $10 off their grocery bill.

Qantas said it was still working with Woolworths on a new partnership from 2016.