Shoppers claim Woolworths Rewards points are being ‘stolen’: Are rewards programs too much hassle for the big supermarkets?

Supermarket giant Woolworths is reviewing its Money app, after complaints from shoppers that their Woolworths Rewards loyalty points have been mysteriously redeemed at a range of supermarkets before they’ve had a chance to use them.

News.com.au reports this morning that shoppers who subscribed to an introductory offer for Woolworths Rewards accounts have logged on to the Woolworths Money app to track their bonus points, which equate to vouchers of up to $25, only to find these were listed as having already been used at supermarkets in suburbs far away from them.

The Woolworths Money app reportedly allows users to type any rewards card number in to see the balance on the card. Some shoppers are suggesting that other people ‘stealing’ their points by typing in card numbers, reviewing the balance on those cards, and then potentially generating barcode vouchers to use themselves.

One shopper complained on the Woolworths Facebook page earlier this week that he had received an email with news of a $20 voucher, but when he tried to redeem it, it had already been used elsewhere.

A spokesperson for Woolworths confirmed an investigation into the claims found “no issue with the functionality and security of the app”, but said the supermarket is “reviewing how the App experience can be better improved”.

The retailer says it has robust security policies to protect user data, but that anyone concerned about their accounts should contact Woolworths customer care line.

Does loyalty even have a place in groceries anymore?

Woolworths has experienced a number of challenges with its Rewards program over the past 12 months, after introducing its new “Woolworths Dollars” program in January 2016 and then backflipping on this in October after customers backlash about the restrictions the new scheme put on their ability to earn points.

The Dollars program put limits on which products could accrue loyalty points, introducing an orange ticket system that required customers to buy specific products to earn eventual discounts.

“It created a problem for customers, especially their loyalty customers, who said, ‘we want to earn points on anything’. I think the return on the card then was at about two percent,” says retail expert and associate professor at Queensland University of Technology Business School Gary Mortimer. 

Mortimer says the prevalence of loyalty programs at retailers across the board, combined with recent concerns about the model, could mean the Woolworths Rewards model becomes even more “problematic” for the supermarket.

IBISWorld senior industry analyst Nathan Cloutman says the main factor that drives loyalty at the big two supermarkets is still undeniably price, regardless of other methods like loyalty schemes.

But aside from pricing, there are a range of key strategy frameworks both Coles and Woolworths are focusing on, including “store refurbishments, convenience, in store tastings and celebrity endorsements”, Cloutman says.

Mortimer says the big game at the moment for supermarkets is generating “attitudinal loyalty”, and to do this, the likes of Coles and Woolworths should not be afraid to depart from stock-standard promotional strategies.

“Everyone is doing these [rewards] cards, and it’s measuring transactional loayalty — so, how frequently a customer is coming into a store,” Mortimer says.

“They need to focus more on relational loyalty, like maybe giving people a surprise discount at the checkout, just because they’ve come in to see you … or doing good things in the community, creating positive word of mouth.”

The future of tracking and data

The customer databases of both Coles and Woolworths are significant, says Cloutman, and the robustness of data analytics will only become increasingly important in the age of Amazon.

“The Woolworths Rewards scheme is reported to have over 9 million members, while Coles is expected to have over 5 million members,” he says.

The strength of Amazon’s algorithm when it comes to recommending future purchases to shoppers is an important factor in the supermarket wars, and Cloutman says the big two local chains are taking steps to squeeze more information out of their customer databases already.

“The major supermarkets have ramped up investment in data analytics to protect themselves from the arrival of Amazon. For example, Woolworths are now tracking consumer data through their rewards scheme with its $200 million stake in the Quantium Group,” he says. 

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