Why supermarket rewards programs are a scam

supermarket rewards programsSince I broke up with the supermarket, I have been inspired and interested to hear and read about other people’s efforts to shop more ethically and sustainably. I recognise that there are many challenges involved in avoiding the Big Two supermarkets, and today I want to focus on one: the lure of rewards.

As Jan over at The Gluttonous Housewife wrote, collecting points is a seductive reason to choose the supermarket over an independent store. I too was shocked how quickly my petrol discounts were stripped from my Everyday Rewards card, despite having been a loyal Woolworths shopper for almost 20 years.

But I’m here to tell you: supermarket rewards programs are dodgy.

Ten years ago, when I was living in the UK, there was lots of bad press about the level of information that one particular supermarket, Tesco, knew about its customers. At the time, it was reported that one pound in every eight spent in the UK was at Tesco, and the supermarket company sold everything from mobile phone plans to clothing to insurance.

Fast-forward to now and there is no doubt in my mind that Coles especially has the Tesco business model in its sights. The recent addition of clothing, the increase in own-brand products, insurance, petrol, even the look of Coles is morphing into a home-grown Tesco.

So what does this have to do with the Flybuys card you wave at the cashier?

Supermarket rewards programs are not designed to reward you. They are designed to collect lots of information about you so they can market specific things to you. Not to your type of person, but YOU.

This morning, I found an email from Coles in my junk box. It is entitled: “Jo, your personalised list of this week’s specials.” And like a time capsule, it happens to contain the last nine items I bought the last time I (ever) shopped at Coles:

Picture 4

Now, I know that some people might think, “that’s great!”. I could save about $5 on stuff that I clearly use. But I think it is completely dodgy and it makes me uncomfortable. What do you think?

Here’s what consumer watchdog Choice has to say about shopping loyalty cards:

“Just how exactly much do you get out of a typical rewards program? Not nearly as much as the companies behind them do. Most of these programs offer such poor rewards that you generally save less than a dollar per $100 spent.”

At this point, I should say not all rewards programs are dodgy. Airline loyalty programs make sense to me, our local fruit shop stamps your card when you spend a certain amount and gives you free eggs when you get to five stamps. I also have a loyalty card for my health food shop because on certain days I get 10% off. To me, these are enterprising schemes that encourage loyalty.

But the supermarket rewards programs are on a different level. What you have in your shopping trolley is actually a pretty personal thing and it reveals all kinds of things you may not be aware of. For example: health or weight problems (low-cholesterol margarine, diet foods), whether you’re pregnant, the age groups of your children, whether you’re single, a cat or a dog person. There are some concerns the level of information collected means you could actually be identified. And the supermarkets are sharing this information with marketing and data analytics firms. Read all about that here.

Here’s Woollies talking about how it uses its shopping data to choose people to sell insurance to:

“Customers who drink lots of milk and eat lots of red meat are very, very good car insurance risks versus those who eat lots of pasta and rice, fill up their petrol at night, and drink spirits. What that means is we’re able to tailor an insurance offer that targets those really good insurance risk customers,” Woolworths Ltd director of group retail services, Penny Winn, told AdNews.”

I find this quote chilling. You? Read more about how supermarkets and other retailers use the information they collect in the Choice report here.

If you’re reluctant to break up with the supermarkets because of your rewards program, I suggest you think hard about whether the rewards are actually worthwhile. For example, saving 4c a litre on fuel adds up to only $2.80 if you fill a 70L tank. Is that worthwhile to you? It may well be, everyone’s situation is different.

Personally, I think supermarket rewards programs are a bit of a scam. I’d love to hear your thoughts.

 
photo credit: gosheshe via photopin cc

Comments

  1. Jan (A gluttonous wife) says

    Oh Jo, you sum it up beautifully, and the chilling reality of the rewards programs makes me very uncomfortable indeed! My skin literally crawled reading this post. I just thought everyone was getting the emails saying that wine was on special, but that is not the case, that my friend is just plain dodgy, even to me who loves a wine and a bargain.

    Since my break up with the supermarket challenge, (although its hardly a challenge now after 2 weeks its a breeze)I’ve noticed the ‘real’ rewards that are available from the local guy. Our bakery has a loyalty card, as does our favourite cafe, the fish monger has 20% off on fridays, the fruiterer has a free item with every $20 spent like a dozen eggs or a punnet of strawberries. I could go on with examples, but these are real money in my pocket rewards. The rewards that aren’t visible or calculated with money or stamps is the human experience. The meaningful conversation you have with the fruiterer, the relationship you are building with the butcher, plain old conversation, thrown in with a smile and maybe an free snag.

    I sincerely thank you from the bottom of my heart, to opening my eyes and to making me shop more consciously. I thank my stars I stumbled across your fabulous blog. I can hardly wait for your next installment!

    Cheers
    Jan xxx
    http://www.agluttonouswife.blogspot.com
    Jan (A gluttonous wife) recently posted..melt in your mouth whole roasted beef scotch filletMy Profile

  2. Fran says

    Oooh, so now I’m wondering if there’s a place for a subversive ‘Scam your Supermarket’ website .. so the week before I take out insurance, I rock up at Woles, buy lots of milk and meat, wave my (new) fly-pants card and – voila, my late-night petrol-buying, pasta-scoffing habits are obscured and I get cheap insurance…
    Would love to see these programs exposed and exploited, thanks for doing your bit Jo!

  3. Abbie says

    I tried explaining this exact concept to my partner, who rolled his eyes and muttered comments under his breath with “conspiracy theorist nutter” appearing in there somewhere…
    Simple fact is, why would they offer you something for nothing? I read somewhere else (Might have been Mother Jones, so referring to these programs in the US) someone actually describing these rewards programs more as a, “Penalty for not sharing your information with us program” instead – penalising those that don’t share their info. Fact is, it costs them potential income by offering the specials, but this is more than made up for by 1. the targeted marketing they can do, and 2. Who will buy that information.
    Yet another reason to say “farewell” to the supermarkets…..

  4. Eliza says

    This post made me feel really uncomfortable. Since Woolies noticed we’d stopped buying our fresh food at the supermarket I’ve been inundated with fresh food specials and rewards in my email box which I could “hardly afford” to turn down. Turn them down I did. I no longer use my rewards card, it doesn’t reward me at all, in my mind, if it steals my personal information in the process.
    Eliza recently posted..Illness and food.My Profile

  5. Lila says

    I get what you’re saying but the supermarkets are doing their job, they have shareholders that expect increasing profits each year and this is just one way of getting that. Targeted marketing is not just the domain of supermarkets just check out the banner ads on facebook and many other sites and they too are using your information to market to you.
    I think it’s a choice for anyone to make is it worth selling my personal information by using a rewards card / facebook / entering this competition for what I get out of it or not?
    If the answer is no it’s easy to not do these things and keep your information private.
    Lila recently posted..Little Life – A day at the showMy Profile

  6. Maxabella says

    Total scam, no doubt about it. I didn’t have the cards for ages and finally got around to getting one when they introduced the savings for card holders at the checkouts. I’d rather have the cards and save the money than not!

    Gathering data doesn’t bother me, though. I’d rather they were trying to flog me something I’m interested in rather than something I’m not. Either way, I’m probably not buying!! x
    Maxabella recently posted..South African health rusksMy Profile

  7. Tessa : Down that Little Lane says

    I could not agree more , they are a total scam and I have often noticed how little I get back on the petrol rewards..
    I do have the cards and do shop at Coles and Woolies etc but it is convenient and if they send offers I was buying anyway fab but they certainly don’t get any extra purchases that way.
    Tessa : Down that Little Lane recently posted..Keeping Control..My Profile

    • (dt)em says

      Thanks for the inside info – I can’t believe there isn’t chocolate in my specials. They must be based on the one day I didn’t buy any!

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge