If you shop regularly at Woolworths or Coles, you can't help but be aware of Everyday Rewards and Flybuys. 

At the checkout customers are prompted to scan cards, and many of us are doing just that, with both loyalty programs boasting more than nine million active members apiece.

That's a tremendous number of Australians swiping at the checkout in search of meaningful discounts, money back and other benefits. 

But what are the supermarkets getting in return for your participation? 

According to the results of a recent survey of more than 8000 CHOICE supporters, a significant number of people are concerned about the downsides of these programs.

How the supermarket loyalty programs work

The points programs of the big two supermarkets can seem complicated. With complex systems for accruing and redeeming points, it can be hard to tell how much value you're actually getting.

So here's a simple explainer on the Coles and Woolworths loyalty rewards programs and how they work. 

Source: Flybuys

Flybuys

Flybuys is Coles' loyalty program.

You earn at least one point for every dollar you spend at Coles and other Flybuys partners including Target, Bunnings, Kmart, Officeworks, First Choice Liquor Market and Liquorland.

You'll also see options to accrue Flybuys points through your Coles insurance policy, Optus phone plan, your HCF Health insurance and even your gas retailer, depending on where you live. These deals often give you lots of points when you sign up, and/or additional points when you spend instore. 

You can also increase the number of points you accumulate when you activate offers available through the Flybuys app or online. 

If you have a Coles Reward Mastercard you'll also receive more points each time you use that card to make a purchase, and you can also get points by filling out surveys through the Flybuys app.

Flybuys points can be redeemed in a few different ways. 

• Money off your shopping. Every 2000 points can convert to 10 Flybuys dollars that can be spent at Coles or other Flybuys partners. 
• Flybuys Rewards. Rewards can include products ranging from appliances and tech to cinema tickets and restaurant vouchers. You can also redeem points for gift cards.
• Flybuys Travel. You can pay or part-pay for flights and accommodation using your points.
• Swap them for Velocity Points. 1000 Flybuys points will get you 500 Velocity Points. You can also earn Velocity Status Credits.
• Fuel vouchers. These used to be available on every receipt when you spent a certain amount at Coles, but they are now linked to Flybuys, so you have to be a member to take advantage of this offer. When you spend more than $30 in a single transaction you receive a voucher that allows you to get 4 cents per litre off your petrol at Coles Express petrol stations.

You can earn at least one point for every dollar you spend at Coles and other Flybuys partners. Source: Flybuys.

Coles Plus

This program costs $19 per month. It seems to appeal mainly to those customers who shop online, offering free delivery over $50 and free Click&Collect Rapid as two key benefits. 

While you don't need to be a Flybuys member to use this service, one of the selling points is that you'll receive two points per $1 for qualifying spends at Coles (online and instore) and instore at First Choice Liquor and Liquorland.

Coles Plus Saver

Not to be confused with Coles Plus, the Coles Plus Saver subscription was available only in Victoria and Tasmania at the time of writing. It costs $7 per month and entitles members to 10% off one shop worth up to $50 each calendar month. Subscribers also earn double Flybuys points on all purchases at Coles, First Choice Liquor and Liquorland.

Source: Everyday Rewards

Everyday Rewards

Everyday Rewards is Woolworths' loyalty program. You earn at least one point for every dollar you spend at Woolworths and its partners. 

You can also earn points at other retailers including Big W, BWS and Ampol, and points and savings are also on offer if you have an Everyday Mobile phone plan, a Woolworths insurance policy, an account with Origin Energy or health insurance with Bupa.

The number of points you earn can be increased if you activate the 'boosters' in the Everyday Rewards app or online. These allow you to earn up to 10 points for each dollar spent on certain purchases. 

Woolworths claims that members who regularly use these offers collect on average seven times more points than those who just scan their cards.

You can use your points to get money off your shopping, or bank them to use at the end of the year

Redeeming Woolworths Everyday Rewards points is fairly straightforward. You can use your points to get money off your shopping, or bank them to use at the end of the year.

Like with Flybuys, 2000 points will buy you $10 off your shopping. Or, you can convert them to Qantas Points – 2000 Everyday Rewards points can buy you 1000 Qantas points.

When you spend $30 or more in one transaction at Woolies or Woolies Metro stores, your receipt will include a voucher that lets you save 4c per litre at participating Ampol and EG Ampol petrol stations. 

Unlike Coles' petrol promotion, this saving is available to all shoppers, not just loyalty program members. 

At EG Ampol outlets you can receive an additional 4c per litre discount with your Everyday Rewards when you spend at least $5 instore.

Earn at least one point for every dollar you spend at Woolworths and their partners. Source: Everyday Rewards.

Everyday Extra

This paid subscription typically costs $7 per month if you pay month to month, or $70 annually, though at the time of writing the yearly cost had been reduced to $35 until 4 June 2024. 

It gives you 10% off one shop each month (up to $50) at both Woolworths and Big W, double Everyday Rewards points at Woolworths and Big W, and extra offers to redeem via the app or through your email. You won't get the double points at BWS, nor can you use the 10% discount there.

What are the pros of supermarket loyalty programs?

For the customer

There are plenty of people who love the loyalty programs on offer from the supermarkets and eagerly spruik the benefits.  

"I boosted all the Rewards on the app and had $800 to spend on Xmas presents last year," an Everyday Rewards member tells us. 

"I love the loyalty programs for both brands … it's free money that I'd be spending anyway and the fuel vouchers are also helpful," says another.

"I've managed several flight upgrades with my Everyday Rewards points," another fan tells us. 

For the supermarkets

While the supermarkets agree that programs are great for their customers, they also acknowledge that loyalty is important to them.

"We want our customers to return, of course, so having a loyalty program such as Flybuys is beneficial," a Coles spokesperson says.

Loyalty programs are a way to engage consumers and manipulate their behaviour towards shopping with one store

Dr Jana Bowden, professor of marketing, Macquarie Business School

Woolworths tells us that the insights they gain are also important, helping them to understand which offers are most relevant and improving the effectiveness of their marketing campaigns. 

Dr Jana Bowden is a professor of marketing at Macquarie University's Business School. "Looking at it from the perspective of consumers, loyalty programs offer an avenue for getting greater value at the checkout," she says. 

"Looking at it from the perspective of the supermarket brand, loyalty programs are a way to engage consumers and manipulate their behaviour towards shopping with one store."

Do loyalty programs save you money?

A lot depends on how you use the programs, but experts suggest that the answer is no, loyalty programs don't save you money overall, even when it seems like they do. 

If you're simply swiping the card when you do your regular shopping, the points will accrue and eventually result in money back or another reward. 

Unfortunately, there are several ways in which the deck is stacked against you, making real savings elusive. 

Many of the 8000-plus people who responded to our April 2024 survey regarding attitudes to supermarket loyalty programs told us that since they were going to shop at those stores anyway, they might as well get some benefit. 

There is evidence that loyalty programs prompt consumers to change their spending behaviour

Dr Jana Bowden, Macquarie Business School

"I am very aware and conscious of my purchases and I am not making decisions based on promotions and marketing," was a typical response.

Bowden says that while it's true the programs let customers earn rewards, shoppers need to exercise caution to avoid being swayed by the marketing that comes with membership.

"There is evidence that loyalty programs prompt consumers to change their spending behaviour by increasing purchasing frequency, increasing basket size and encouraging consumers to pay a premium in order to gain loyalty points or enhanced loyalty status," she says.

The irony is that by signing up to a program, consumers are simply helping the supermarkets tap into their buyer psychology and market to them more intensively.

That risk was something many of those who responded to our recent survey were concerned about. 

"I often get caught buying extra or being charged more just to get a few more points," says one shopper. 

"Sometimes you have to spend more than you should have because you are close to the amount to get the points," says another.  

Sometimes you have to spend more than you should have because you are close to the amount to get the points

Loyalty program survey respondent

Other respondents worried that the cost of running these programs would result in higher prices more generally, and some acknowledged that by locking themselves into shopping at just one supermarket, they might miss out on better prices at other stores.

"The irony is that by signing up to a program, consumers are simply helping the supermarkets tap into their buyer psychology and market to them more intensively," says Bowden. 

"The costs to the consumer in this sense are both economic (through heightened potential overspending), as well as intangible (consumers are inadvertently opening themselves up to greater marketing manipulation)."

Loyalty schemes and their personalised offers can make it harder to work out how much an item really costs.

Most people believe member-only pricing is unfair

Pricing products differently depending on whether or not you're a member of a loyalty program is a contentious practice. 

In our recent survey, many respondents – 79% – said it was unfair for supermarkets to charge people more for certain grocery items if they don't sign up to their loyalty program. 

"Member-only pricing, particularly on essential goods, can discriminate against consumers who can't or don't wish to sign up to a loyalty program," says CHOICE senior campaigns and policy adviser Rafi Alam.

It is a particular disadvantage, he adds, for consumers without access to a smartphone, those who do not have a fixed address, or people too young to sign up to a loyalty card.

Member-only pricing, particularly on essential goods, can discriminate against consumers who can't or don't wish to sign up to a loyalty program

Rafi Alam, CHOICE senior campaigns and policy adviser

It isn't just discrimination against non-members that is troubling. 

"Loyalty schemes and their points-based and personalised offers can reduce the transparency of how much an item really costs," says Alam, pointing out an issue the ACCC has also raised concerns over.

Where does your data go?

How the supermarkets use the information you provide is another concern. 

"I don't like them targeting my inbox with ads for items I've purchased before – it's creepy," one shopper remarks, reflecting a common sentiment.

"They want all your information and they keep track of what you buy, I find that a bit creepy," says another.

While both big supermarkets use your information for targeted advertising, it doesn't end there. 

If you shop at Coles, other Flybuys participant businesses like Officeworks, Kmart or HCF may target you with advertising

"Your data doesn't just stay with Coles and Woolworths or inside the loyalty scheme," says Alam. 

"That data gets shared with their own subsidiary businesses, including insurance, credit cards and mobile phone plans. Unfortunately, there isn't much transparency on how this can be used if you sign up for one of these loyalty programs."

Information may also be shared with partners, which means if you shop at Coles, other Flybuys participant businesses such as Officeworks, Kmart or HCF may target you with advertising or send you marketing communications. The same goes for Everyday Rewards and partner businesses such as Qantas and Bupa.

At several thousands words in length, the privacy policies for both loyalty programs are not a quick read.

Do you know what you're signing up for?

At several thousand words in length, the privacy policies for both loyalty programs are far from a quick read. 

"Each takes 10 to 15 minutes to read, and they're updated frequently," says Alam. "I think we can all agree that no one is taking 15 minutes out of their day to read the policy before they pop in to buy milk on their way home." 

Alam also points out that consent is very vague in these privacy policies.

"There's not much information about how consent is provided or withdrawn, especially when you drill down into how the loyalty schemes and supermarkets can use your data," he says.

It shouldn't be up to consumers to individually navigate their own privacy risks just to access basic essentials

Rafi Alam, CHOICE senior campaigns and policy adviser

Bowden agrees. "There is absolutely an imbalance of knowledge," she says. "How many consumers read the privacy clauses in loyalty programs before signing up? How many consumers find those clauses and the terminology in them easy to understand? I would argue not many."

According to Alam, the real problem is the lack of legal protection for consumers. 

"It shouldn't be up to consumers to individually navigate their own privacy risks just to access basic essentials," he says. "We need to create a culture of data minimisation and privacy by design through stronger privacy protections for consumers."

Stock images: Getty, unless otherwise stated.

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