Woolies Hold’em: Coles Your Move

Genius move by Woolies. They’ve introduced a new plastic card that you can keep track of those handy petrol discounts. Given the state of fuel prices these days, everyone’s using that 4cents off per litre deal when they buy over $30 worth of groceries.

But the thing is, as my tax partner used to say, you pay premium price for your groceries AND premium price for your petrol. It’s not such a great deal to spend more on grocercies just so you can get that 4 cents off. I’ve been guilty of it in the past.

However, in terms of marketing potential for this card, this is a boon for woolies. Because each customer now will have an incentive (the petrol discount) to have that card and they can track what that customer is purchasing, the frequency of their purchases, where they are purchasing, what time, favourite products, etc….. The information you can get from that will be incredible. Of course, Woolies isnt advertising this fact 😛

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Fuel’s Gold as a Million People Play Cards With Woolies

By Julian Lee, SMH

June 5, 2008

WOOLWORTHS has left the door open for its new discount fuel card to morph into a sophisticated customer loyalty card similar to that pioneered by the British supermarket giant Tesco.

Its Everyday Rewards Card, which completed its national debut in NSW last week, allows shoppers to collect fuel discounts on a plastic card rather than on paper. It also offers entry into a weekly prize draw in stores as well as an intermittent national draw worth $10,000.

Woolworths executives say the uptake of the card has “surpassed expectations” with “well over a million” shoppers registering their details – the first step in harvesting crucial data on what customers buy and when.

Richard Umbers, general manager customer engagement, said there was nothing to stop Woolworths turning the card into a tool that targeted shoppers with offers for specific products based on their shopping behaviour.

“There could be things in the future that might be of value to them [but] we have to make sure we don’t send them offers that are of no real value to them,” he said. “I haven’t ruled it out as direction we are going in but at the moment we are concentrating on building it around the sweepstakes and the four cents-a-litre discount.”

Tesco has about 10 million Clubcards operating in Britain, collecting a wealth of data on its customers and informing every aspect of its business, from store layout and merchandising to buying and marketing. Each year millions of coupons offering discounts or promotions are mailed to customers as “rewards”.

Mr Umbers said it was unlikely Woolworths would directly follow Tesco’s lead. “I see no potential in coldly marketing offers that are simply spam and send [customers] to different brands and products around the marketplace. I don’t see a place for that.”

He said Woolworths was evaluating a number of options, among them its Frequent Shopper scheme in Tasmania, but any decision would be based on whether customers are asking for something more.

Chatter on the company’s blog and online surveys convinced Mr Umbers of the switch from paper to card. “The more involved in the direction it is going the stronger the program will be,” he said of customer response.

A Woolworths-branded credit card is to be introduced next financial year and some observers have speculated that the two could be combined into one card, to which a Woolworths spokesman responded: “We are aware of the link between the two but we are not giving away any details.”

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5 Responses

  1. Genius move? Maybe. The plus side for consumers is naturally not having to collect those pesky coupons. The negative can be summed up by one of the respondents on the Everyday Rewards blog:

    “This card scheme is terrible! I hate the concept with a passion – there is no way for me to tell if I have fuel saving vouchers any more before I pull into a service station??? Well, that simply means I’ll go to another service station in all probability. The first time that I hand my card over and the service station attendant says “there’s no savings on this card” is the last time I buy fuel from a Safeway-branded Caltex. by MQ on 31/5/2008 4:14″

    So it appears Woolies may appreciate the data much in the same way that the FlyBuys consortium has for 13 years. The urban myth of discount implies higher grocery prices and higher fuel prices doesn’t make sense to me. If it did, FlyBuys would have folded years ago. Consumers aren’t that dumb.

  2. Don’t forget the sweepstakes attached to using the card; every week, every store with periodic grand prizes. Its not just about the fuel vouchers.

    I for one welcome the idea that I could receive offers for products I actually buy rather than searching through the catalogue and hoping. I certainly get enough spam already.

    [Interest declared; I have a role in supporting the Everyday Rewards blog]

  3. PP – My post was talking from an advertising point of view, the benefits to Woolies and the potential of the data that could be gathered. Something that I omitted from discussion was the effect on the consumer. Thank you for pointing that out.

    Petrol stations that have the discount typically do charge more for the petrol, because they are expecting people to use the discount voucher.
    Perhaps there could be a way Woolies could have a swipe machine at the stores or the bowser so you could see how much fuel savings you have on it before you start pumping. Or you could log in online and see if you have the discount.

    Tim – the card has more benefit to the consumer if they could receive rewards tailored to them. that is something that advertisers, marketers and the retailer will have to work on.

    A large amount of people actually like having coupons and actually seeing them and ripping them out. That’s the only way that some people are exposed to discounts. One method might be to have a website where you could select the coupons that you want and print them off, also saving paper in the process. If you start selecting certain coupons, over time, those particular ones could be regularly delievered to you online, possibly via email.

  4. “Petrol stations that have the discount typically do charge more for the petrol, because they are expecting people to use the discount voucher.” I think this is a popular myth myself and have seen nothing to justify it. The only possible angle is that often Coles Express or Woolies lead the market up, and maybe others are quicker to lead the market down, but I suspect that for 98% of the time their board price will be the same as their competitors. And if on average there was a difference it would way less than the 4 cents they are giving away. In any case, the discount is “funded” out of the increased supermarket sales they’re seeking – that’s the main game for them. Which raises the interesting question about whether the two protagonists have pushed grocery prices up to fund the petrol discount. Almost impossible to prove or disprove methinks.

  5. read “the wall mart effect”, as usual we will follow the US lead, and i am sure coles would be selling back the data (metrics) to the FMCG suppliers, be it via discounts or cash. there are economic limits to efficiency though. also tie petrol into the alcohol and pub (AHL) strategy that the super markets have embarked on (gambling and booze) to create future earnings growth, it will be a matter if time till they go international.

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