Flybuys redemptions on rise to stretch household budgets

The number of people signed up to Flybuys has hit 9 million and points redemptions are soaring as members of the loyalty program use it to cope with cost of living pressures.

The nation’s largest loyalty scheme, Flybuys, has witnessed a large leap in redemptions of points over 2023 as households facing cost of living pressures used their accounts at Flybuys retail partners such as Coles, Bunnings and Officeworks.

Flybuys remains very popular, with more than nine million active members in June 2023.

It achieved year-on-year growth of more than 8 per cent, with the points system a key attraction for its retail partners, including those operated by joint owners Coles and Perth-based conglomerate Wesfarmers.

However, the cost of maintaining and growing the loyalty program – as well as the mounting cost of technology and cybersecurity to keep member information safe – has also ratcheted higher.

The latest accounts for Loyalty Pacific, which owns Flybuys, show a near 80 per cent increase in full-year losses to $26.854m. Spending on technology was more than $32m, after $32.6m in 2022.

However, the loss of $26.854m, up from a $14.9m deficit in 2022, is immaterial compared to the profits of Coles and Wesfarmers.

The Flybuys accounts lodged with the corporate regulator report that revenue, which reflects the shopping activity of its members, rose 27.5 per cent to $499.59m.

Flybuys chief executive Anna Lee told The Australian the loyalty program’s revenue growth was primarily driven by an increase in redemption activity, as its revenue is recognised when points are redeemed.

Flybuys chief executive Anna Lee.

Cost of living pressures were driving many Flybuys members to use up their points at the checkout, she said.

“We saw a 40 per cent year-on-year increase in members redeeming and our members also redeemed more often,” she said.

“With cost of living as the top priority for our members, an uplift in redemption activity demonstrates more members are turning to Flybuys to be rewarded with more value when shopping at our 20-plus coalition partners.”

Coles CEO Leah Weckert, who is a director of the business, told The Australian she had witnessed a growing trend of shoppers using their points to stretch their spending budgets for some time.

“I think over the last 12 months in particular as we have seen the cost of living challenges increase we have seen loyalty emerge as something that customers are more focused on, finding bonus points offers, personalised offers and things they can take advantage of, so they then can take those loyalty points and convert them into dollars off their shop,” she said.

Ms Lee said Flybuys had increased its annual investment in making the redemption experience more seamless for members, including the introduction of “Instant $10 off your shop’’ in Coles supermarkets and easier ways to redeem travel rewards through partners such as Virgin Australia’s Velocity.

“In addition to enhancing the redemption experience, we’ve also increased year-on-year investment in other areas including technology improvements to strengthen cybersecurity, further progressing our mobile-first strategy with paperless fuel discount dockets with Coles Express, and uplifting member support at our service centre with additional team members and introduction of self-service options, including chat support to complement our current phone support,” she said.  

The cost of boosted member services and service delivery rose to a combined $53.4m in 2023, up from $34.8m in 2022.

A number of retailers owned by Wesfarmers, including Bunnings, have recently been added to the Flybuys program, which now includes well-known stores such as Liquorland, Kmart, Target, Coles, Virgin Australia, and Catch.

It is estimated that Flybuys members have access to approximately 20 per cent of all retail expenditure in Australia.

The directors of Loyalty Pacific (Flybuys) includes Wesfarmers chief executive Rob Scott, Coles CEO Ms Weckert, the boss of Kmart Group Ian Bailey and Coles chief customer officer Amanda McVay.