Aldi has announced its large expansion plan of 120 stores into new territories SA and WA which is really hurting Coles and Woolworths supermarkets. The budget chain will have an empire of 497 stores across Australia when it's finished, scaring the two market leaders. As part of Woolworth's efforts to stop the its sliding market share, they've decided to scrap its under-utilised Everyday Rewards program and instead begin instantly offering customers cash off their grocery bills.
The announcement of Woolworth's interesting new plan to entice more customers back into its stores was made on the 25th of October. For me, the most poignant aspect of this new scheme was mentioned by Monash University who found that the average shopper would be able to earn $10 every 7.4 weeks. That's less than half the amount of time it would have taken under the previous FlyBuys scheme to earn the same amount.
Previously, Woolworths used the Qantas Frequent Flyer (QFF) points program to offer customers a reward for their purchases, but as of 25th October this program will now be phased out. Starting almost immediately the company will shift to a position where it rewards all nine million rewards customers with immediate discounts off their purchases.
Over the past 12 months Woolies have been experiencing trouble with sliding profit margins and customer retention rates as competition heats up between it, Coles and new rival Aldi. The company needs to act quickly and aggressively if it intends to use its revamped rewards program to save declining profits, which they believe will be the answer (based on a research project commissioned internally). The new rewards program will, in their words, deliver money back to shoppers “more than twice as fast.”
The new scheme will be called ‘Woolworths Rewards’ and it would appear that an overhaul was definitely needed considering the verdict of internal research conducted by The Sunday Telegraph. Their findings uncovered that 60% of members of the original ‘Everyday Rewards’ program who enrolled in the Qantas Frequent Flyer program failed to redeem any points for anything over the past year. The research also showed that another 30% of customers failed to redeem any points during the entire time of being enrolled.
If you want to sign up to Woolworth's new scheme, take note that it starts this Wednesday, the 28th October. The way it works is that customers will earn Woolworth dollars (where $1 Woolworths dollar = $1 AUD) with the purchase of any orange-ticketed items from both Woolworths and BWS liquor stores.
So how much does the company expect to save its customers? Well, according to Woolies' own research, customers visit their stores on average 2.5 times per week and spend roughly $42.90 per visit. That means that based on a typical shopper spending $108 per week, the new scheme will save them around $10 off their shopping in just over 7 weeks.
The guy in charge of the program is Woolworths' Food Group Managing Director, Brad Banducci. As a response to customer complaints about point fatigue and long waiting times to redeem points, his team created the new instant rewards program that we see today. During their research 68% of customers preferred to have immediate remuneration compared to points.
“The feedback was overwhelming – we needed a simpler rewards program. 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,” said Mr Banducci.
Everyday existing rewards members will automatically receive their new Woolworths Rewards card in the post, from 28th October, with all other customers able to apply online. The frequent flyer program will cease operation at the end of the year, 31st December 2015, but all members will still be able to receive fuel discounts.
The great thing about this rewards program is that it doesn’t require a customer to change their shopping habits. Most of the popular items will be ticketed in orange and any that aren’t will be clearly visible. So if a customer wants to save even more money, they can opt to buy the reward program items wherever possible.