Woolworths and Qantas are back talking happily about shopping and frequent flyer points again. The Australian supermarket giant is no longer going to cut Qantas Frequent Flyer (QFF) points out of its shopping rewards scheme and the two have announced a new partnership .
In October, Woolworths decided to scrap the rewards program that gives its customers QFF points for grocery spend. Instead, Woolies planned to offer its nine million rewards customers cash off their grocery bills.
The Woolworths’ plan to rebrand its Everyday Rewards offering and end its QFF points arrangement was called “one of the biggest shakeups in Australia’s loyalty marketing sector in recent years”. See: Woolworths dumps Qantas from its rewards program
Now, however, Woolworths has done a remarkable Christmas U-turn. Woolworths Rewards and Qantas Frequent Flyer members will be able to convert Woolworths Dollars into Qantas Points, continuing the six year association between Australia’s largest supermarket chain and the airline for at least another three years, a Qantas statement confirmed this morning.
The new agreement will give customers the choice to convert their Woolworths Dollars, earned through buying orange ticket products, into Qantas Points at a conversion rate of 870 Qantas Points for every 10 Woolworths Dollars.
Woolworths customers currently earn QFF points for each dollar over AUD 30 they spend on a single shop.
A Woolworths executive was quoted in October explaining the decision to dump QFF points. He said the chain had taken note of customer demand for an instant reward rather than flyer points. Independent research had found 68% of Woolworths customers wanted money off their shopping, the executive said. Only 9% preferred a points-based scheme. The executive spoke of “points fatigue”, a term denoting customer distaste for lengthy lead time in redeeming a benefit such as QFF points.
Now however, Woolworths has apparently “bowed to pressure from customers to reach a new partnership agreement with the airline”.
Considering what the Woolworths executive said in October, the supermarket chain’s customers must have had an amazing change of heart. Maybe it’s Christmas. Or perhaps the 9% who preferred a points-based scheme turned out to be a pretty high-spending and influential 9%.
Woolworths and Qantas Frequent Flyer will now work on implementation of the Qantas Points option, including necessary IT and systems changes, with a full launch expected in the first half of 2016, Qantas said today.
Between 1 January 2016 and the launch of the new option, customers who previously earned Qantas Points via Woolworths Rewards will receive regular bonus Qantas Points offers, ensuring shopping at Woolworths remains the best option for Qantas Frequent Flyers during the implementation period. Those with a Qantas Frequent Flyer-linked credit card will continue to earn points each time they shop at Woolworths.
Woolworths’ new QFF deal is expected to get going halfway through 2016. Emails offering consumers the choice of earning QFF points or Woolworths Dollars are likely to be despatched early next year.
The Sydney Morning Herald reported that consumers had rebelled against Woolworths’ decision in October to move away from frequent flyer points (which were costing the retailer between AUD 60 million and AUD 80 million a year) in favour of discounts at the checkout.
Woolworths is already fighting a retail battle against Coles and the fast-growing German-based chain Aldi. Aldi, the outsider, is gaining market-share fast. Instead of fiddling around with cards, petrol discounts, loyalty programs and frequent flyer points, Aldi just offers its customers quality merchandise at rock-bottom prices.
Aldi’s formula seems to work. Last year, Aussie entrepreneur Dick Smith made the bold prediction that Aldi would wipe out Coles and Woolworths within 15 years. Smith hasn’t retracted his forecast.
Written by Peter Needham