Woolworths combats Amazon's entry through simplified loyalty program

By @mik_mapa on
A shopper walks out of a Woolworths store in Sydney, Australia, May 12, 2016. Reuters/David Gray

Woolworths director of loyalty and customer data Ingrid Maes said that the supermarket giant has benefited through its simplified loyalty program. She said that its new program has a data analytics feature that could combat the entry of Amazon in Australia's retail business.

The supermarket giant launched its loyalty program in August 2016 but it scrapped the Woolworths Dollars feature of its unpopular orange tickets scheme. Although the company decided to make the change, based on its current status the company said that the loyalty program members has reached to 9.7 million members. The company perceived it as a success as the scheme was able to pay for itself in less than three months. However, Maes would not reveal how much the company had invested in its personalisation machine.

Maes said that the Amazon has already played heavily in the digital market and it would require the help and participation of the Australia's supermarket giant's staff member to combat it. She said that the company should also focus on shoppers.

Woolworths Loyalty program

The company claimed that its loyalty program was focused on reaping the rewards of delivering tailored and relevant communications to shoppers. Maes said that the Australian shoppers were increasingly frustrated with the excessive amount of untargeted and low-valued communication. She said a program that could cut through the frustration, by default, the company would end up with a program that customers value.

However, retail analysts said that supermarket loyalty schemes did not gain true loyalty from the customers. They said that it only resulted in getting more out of each member including the increased number of store visits and spending. They said that true loyalty has not existed in the country's intensely concentrated grocery sector for decades.

Experts and analyst view on Woolworths loyalty program

Advertising expert Adam Ferrier said that companies using data to the advantage of their customers and their own business would gain a significant benefit especially when the U.S.-based retailer arrived in the country. He said that Woolworths' partnership and 50 percent stake in data analytics business Quantium would give the company a powerful edge in its loyalty program and data game.

According to broker UBS, the fourth most important driver of decisions among shoppers was loyalty programs. The broker claimed that the survey showed a significant increase as the driving factor was ranked number 10 in its June 2016 survey. Analyst Ben Gilbert said they were dismissive of loyalty schemes as they perceived that every-day low pricing was the best loyalty scheme. However, he said that all major retailers were offering every-day low pricing that loyalty program would help a retailer to position itself differently among its competitors.

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