The value of the loyalty programs offered by Coles and Woolworths is being brought into focus as the competition regulator publishes fresh data about the market power of big supermarkets.

Declaring on Friday that ‘oligopolistic’ markets can limit price competition, Australian Competition and Consumer Commission deputy commissioner Mick Keogh said the major supermarkets have similar loyalty schemes.

“We see Woolworths and Coles providing a broadly similar experience to customers,” he said.

New ACCC survey data finds 81 per cent of Australian shoppers have signed up to a loyalty scheme with a supermarket, mainly Coles’ Flybuys and Woolworths’ Everyday Rewards.

Just over half, 51 per cent, are members of at least two programs, but the survey also found that the schemes don’t actually influence where people buy groceries for about half of consumers.

Boost needed

“Numerous respondents” also expressed concerns about loyalty schemes being complex and requiring them to ‘activate or boost’ offers to receive the biggest benefits.

Nevertheless, the ACCC said the major supermarkets are looking to make the programs more valuable, including by moving towards special discounts only available to loyalty club members.

“With the introduction of member-only pricing, some consumers may feel they have no option but to participate in loyalty programs, even if they have concerns about handing over data to the supermarkets,” Keogh said.

Financial adviser and author of Virgin Millionaire Ben Nash said that loyalty programs can offer real benefits to consumers.

“If you want to maximise them the best way to do that, from my experience, is to do exactly what these companies want when they structure the program,” he said.

“That means actually being loyal and trying to use the same company for your shopping and your fuel.”

Cost-benefit analysis

But the benefits need to be weighed against what you could save by shopping around.

Figures earlier this week from Choice revealed that buying groceries between multiple supermarket chains is the best way to save money, with Aldi being the cheapest option.

“You’re getting a fraction back of what you’re actually spending, so if you’re spending more money for the sake of it you’re going to end up behind,” Nash said.

“The savings that you can get from using different providers and sometimes even going outside the major chains will often save you more than what the loyalty points are worth.”

In other words, consider going where the actual product discounts are steepest and then still use your loyalty program when the points you accumulate will be more valuable to your budget.

Coles and Woolworths’ loyalty schemes are remarkably similar in the way they reward shoppers.

Source: ACCC

How they work

Each delivers a point for every $1 spent at their supermarkets and with partner businesses.

Those points can then be redeemed for a $10 discount on your shop at a cost of 2000 points.

The tricky part is unpicking how valuable these schemes are comes down to which partner businesses you’re more likely to shop with.

That has a huge bearing on how many points you’ll accumulate.

For example, consumers that shop at Kmart can scan their Flybuys card, while Big W customers have access to Everyday Rewards.

But keep in mind that as you shop the supermarket giants are collecting data about your purchases.

The ACCC said that it is investigating whether the huge amounts of data major supermarkets collect through loyalty programs is reinforcing the market power of the big two grocery chains.

“We are considering whether these programs confer competitive advantages on supermarkets with established loyalty programs, or may act as a barrier to entry or expansion by rival supermarkets,” the regulator said in its report.