German supermarket giant Aldi has taken aim at rivals Coles and Woolworths in a new marketing campaign, claiming their loyalty programs are lacklustre.
Declaring itself as “anti-loyalty program” in a new blog post, Aldi has released a dystopian-style ad that calls loyalty schemes like those offered by Australia’s major supermarkets “pointless”.
Aldi has also released a new online calculator that encourages shoppers to assess the deal they’re getting from loyalty programs that offer one point per dollar spent, such as Woolworths Rewards and Coles’ Flybuys.
It claims that a consumer spending $200 per week on groceries would only have enough points to redeem a 32cm Tefal frying pan after one year and five months, after spending $15,115.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
A comparable frying pan is available on eBay for $54.90, a reality that Aldi says represents “poor reward” for loyalty members.
“Loyalty scheme members spend more than non-members. And, in general, they’re poorly rewarded,” Aldi said, referencing Canstar Blue research from earlier this year.
“We think points are pointless. We think loyalty schemes are a waste of time.”
The calculator excludes promotions, bonus points and partner activity and is based on information collated from Coles Flybuys’ vouchers and products, and Woolworths Rewards vouchers.
The campaign is an aggressive move from the German-entrant, which has for years tried to position itself as a cheaper alternative to Coles and Woolworths, without any of the frills or fuss.
Retail expert Gary Mortimer, associate professor at the Queensland University of Technology, said Aldi wasn’t trying to capture market share with the campaign and was instead looking to cement itself as fundamentally different.
“It’s a bit passive aggressive,” Mortimer tells SmartCompany.
“The message clearly is, don’t be like everybody else, everybody has a loyalty scheme, but we’re different … marketing 101 is to ask how you are differentiating yourself.”
Australians are avid consumers of loyalty schemes. Finder.com.au research from February found 90% of shoppers belong to a loyalty program and more than 60% are influenced by them.
A Woolworths spokesperson said its rewards program has 11 million members that receive a range of benefits, including bonus points on exclusive email offers.
“We’re also focused on making shopping simpler for our members with increasingly personalised and relevant bonus point offers across our wide range of more than 30,000 products,” the spokesperson said.
A Coles spokesperson said the eight million members of its Flybuys program can earn points through 20 partner retailers, including Target, Kmart and Liquorland, and that members were regularly offered bonus points.
“Members can also multiply the number of points they earn at Coles by taking out a policy with Coles Insurance or paying with a Coles credit card. Coles offers our customers quality and service unmatched by our competitors,” the spokesperson said.
A reward for disloyalty?
According to Michael Ginsburg, founder of consumer comparison website Spending Hacker, Aldi is both right and wrong in its analysis of Coles’ and Woolworths’ loyalty programs.
He says for consumers who just participate in the programs passively, merely scanning cards as they shop, the schemes are a “waste of time”.
However, he claims shoppers that strategically scan their cards to prompt the systems into providing them bonus offers could save up in excess of 20% on their grocery bills.
“The programs are run by computers and algorithms,” he tells SmartCompany.
“If they see you as a customer slipping away … they’ll start sending you incentives.
“The thresholds keep getting lower if you don’t bite,” he claimed.
In its campaign blog post, Aldi claimed the data consumers were providing to loyalty scheme providers may be being used in ways they weren’t aware of.
“Loyalty schemes are often used to harvest huge amounts of personal data from customers who don’t read the fine print,” it said.
“You may not have a problem with your supermarket knowing how much you spend with them every Saturday, or even which apples you prefer. But how do you like the idea of your data being shared with or sold to third parties?”