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Supermarket loyalty programs on the nose with consumers

Smiling customer leaning on a full shopping cart and showing a blank loyalty card at the supermarket, grocery loyalty program and discounts concept

We all wave our supermarket loyalty cards through the machine when we shop and don’t think too much about it. 

But there is an increasing trend in supermarkets to offer ‘member’ prices that add another discount, and it’s making us nervous and a little bit cranky.

Consumer advocacy group CHOICE has found four in five Australians think it’s unfair supermarkets charge higher prices for customers who don’t sign up for loyalty programs.

It comes from missing out on specials, but it’s also motivated by shoppers not wanting to hand over personal data to a large corporation to be ‘rewarded’ by cheaper prices.

Because, let’s face it, after Telstra, Optus and Medibank’s data breaches in the past few years, big companies have shown they don’t always have our best interests at heart when it comes to cyber security. 

CHOICE surveyed 8000 Australians and found nearly half of them were worried about data being collected about them through loyalty programs. 

Doesn’t pay to be loyal

“The Coles and Woolworths duopoly are quick to tout the benefits of their loyalty programs, but we’ve found it doesn’t always pay to be loyal,” says CHOICE senior campaigns and policy advisor Rafi Alam.

“Member-only pricing discriminates against consumers who don’t wish to share their data by signing up. People shouldn’t need to sign up for a loyalty program just to get discounts on products, especially everyday essentials. 

“Our survey found 79 per cent of respondents think it’s unfair for supermarkets to charge people more for certain grocery items if they don’t sign up to a loyalty program.

“To make matters worse, Coles and Woolworths collect excessive amounts of personal data through their loyalty programs, and it doesn’t just stay within the scheme. 

“Your data may get shared across insurance, credit cards, phone plans or subsidiary businesses. Sadly, there isn’t much transparency on how your data can be used if you sign up,” says Dr Alam. 

Woolworths’ Everyday Rewards program allows customers to collect points through its supermarkets, BWS liquor stores and Caltex Woolworth fuel stations. These can be linked to Qantas reward points. 

Extra points and perks

It also runs a program called Everyday Extra where customers pay a fee for extra discounts and points and perks. 

Coles offers the Flybuys program, which also earns points at Officeworks, Kmart, Target, Liquorland and Bunnings.

It also offers a subscription loyalty program called Coles Plus, with extra points at Coles, 10 times the points at First Choice Liquor and Liquorland, random perks and some discounts on Click and Collect services. 

Flybuys can be connected to Velocity Flyer, Virgin’s loyalty program. 

In CHOICE’s submission to the recent senate inquiry into supermarket price gouging, the group said loyalty programs were misleading and deceptive. 

“Member-only pricing is an unfair pricing practice, as it pushes consumers to sign up to rewards programs – providing their personal information and detailed purchasing behaviour in exchange for cheaper products,” its submission said.

“This is particularly inappropriate when applied to essential products like groceries, as everyone should be able to access affordable groceries without joining a membership program.”

Data breaches

And it’s not like Australia’s supermarket giants haven’t already experienced data breaches.

In 2022, Woolworths had to admit that about 2.2 million customers were hit by a data breach from its MyDeal loyalty program. 

The details exposed included customer names, email addresses, phone numbers and delivery addresses, as well as birth dates for people who had to verify their ages when buying alcohol.

And in 2023, Coles announced historical customer credit card details were stolen as part of a breach of the Latitude Financial Services hack

Are you a member of a subscription supermarket loyalty program? Do you think it’s worth it? Why not share your experience in the comments section below?

Also read: Report recommends forced sale for badly behaved supermarkets

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