Woolworths ditches Qantas rewards tie-up as shoppers complain of “points fatigue”

WOOLWORTHS will ditch its Qantas tie-up as part of a major overhaul of its loyalty card after shoppers complained of “points fatigue”.

IT is their latest salvo to claw back market share and woo customers back into their stores.

Woolworths will today unveil its latest bid to halt its sliding market share by scrapping its under-utilised rewards program — instead offering customers cash off their grocery bills.

The Qantas Frequent Flyer (QFF) points program will be dumped with the focus shifted back on rewarding its nine million rewards customers with an immediate discount off their purchases.

The move represents the latest move in the aggressive supermarket war with Coles, with commissioned research claiming the revamped Woolworths rewards scheme would deliver money back to shoppers “more than twice as fast”.

Woolworths has been fighting softer supermarket sales, culminating in the departure of chief executive Grant O’Brien after five years.

The revamped, renamed Woolworths Rewards scheme follows the supermarket announced it would inject $65 million towards store improvements as part of the shake-up.

Internal research obtained by The Sunday Telegraph reveals 60 per cent of Everyday Rewards’ members who enrolled in the Qantas Frequent Flyer program failed to redeem points for anything in the past year.

Less than half of Woolworths Everyday Rewards’ members redeemed any points in the last year. Pic Drew Fitzgibbon

A further 33 per cent of those enrolled in the program had never redeemed points.

Woolworths is confident Coles would not copy its new scheme given its signing of a new deal with Qantas rival Etihad Airways as part of its FlyBuys scheme.

The newly-revised scheme will take effect from Wednesday with rewards for members who purchase orange-ticketed items from Woolworths supermarkets and BWS liquor stores.

Research commissioned by Woolworths has revealed their customers visit their stores up to 2.5 time a week, spending $42.90 per visit.

Under the scheme, typical members spending $108 per week will earn $10 off their shopping in just over seven weeks.

Woolworths Food Group Managing Director Brad Banducci said the scheme was being changed in response to customer demands for an instant reward, together with overall “points fatigue” from the long lead time in redeeming a benefit.

Independent research had found 68 per cent of customers wanted money off their shopping compared with just nine per cent who preferred a traditional points-based scheme, he said.

Members also wanted to do away with the hurdles such as wait times to redeem points.

“The feedback was overwhelming — we needed a simpler rewards program,” Mr Banducci said.

“Many customers said to us that they cared about the basket of goods, the cost of the trolley, and while we have worked very hard to lower our prices, we wanted to give value back to our loyal customers.

Bye fly: Woolworths is ditching its Qantas partnership as part of its revamped rewards program. Picture: supplied

“Further, the majority of supermarket shoppers think it takes too long to earn rewards.”

Mr Banducci said existing Everyday Rewards members would automatically receive their new Woolworths Rewards cards in the post from October 28, with other shoppers able to register online.

Members would continue to receive Woolworths’ fuel discounts, while the frequent flyer points scheme would operate until December 31.

Shoppers wanting to redeems points for flights could still do so by using debit or credit cards linked to a frequent flyer program

Mr Banducci did not rule out inviting a third party into the rewards scheme in the future, but said the immediate focus was giving customers instant savings.

The supermarket chain claims shoppers would not be forced to change their shopping habits with the most popular items to be ticketed, although sticking solely to marked products would result in a bigger cashback.

Prior the revamp, the supermarket commissioned the ACRS-research unit attached to Monash University to evaluate the proposed scheme against the Coles FlyBuys program.

It found the average grocery shopper would earn a $10 reward every 7.4 weeks “less than half the estimated time” to earn the equivalent reward from FlyBuys.

The finding did not take into account sales and promotions offered in various schemes, and was based on the assumption that the range of products offered would be sufficient to ensure an average 1.25 per cent earn rate.

Originally published as Woolworths ditches Qantas rewards tie-up as shoppers complain of “points fatigue”