We all like the idea of getting something for nothing, which probably explains the appeal of store loyalty programs. Research shows these programs do pay off – but mainly for the retailer, not the consumer.
Highlighting the extent of our passion for loyalty schemes, in 2016 an amazing 82% of Australian adults had signed up to at least one loyalty program. That’s close to 15 million people chasing special deals through the likes of Coles Flybuys, Woolworths Rewards and Myer one just to name a few.
Even more surprising, we rarely stop at one loyalty program. On average, we have membership to four different schemes. The end result is that there are more than three times as many loyalty cards in circulation in Australia as there are credit cards – 58 million reward cards compared to 16.7 million credit cards.
The questions is, does all this loyalty benefit our hip pocket? According to research by comparison site Finder, the answer is a definite ‘no’. In fact, Finder estimates Australians could save hundreds of dollars by not signing up to loyalty programs at all.
We’re often attracted to loyalty schemes by a bonus discount or some other perk on the first purchase. However, over time the benefits flow the retailer’s way. In fact, studies show loyalty scheme members spend up to 40% more in store than non-members. When it comes to regular spending on, say, groceries, that extra outlay can have a significant impact on your household budget over the course of a year.
This potential for overspending makes it worth having a think about the best ways to use your loyalty scheme. Yes, there can be rewards up for grabs but they’re not much comfort if you’re left with a solid credit card balance or a whole bunch of stuff you don’t really need or want.
The key is to shop around, especially when it comes to big ticket items. Don’t simply head straight to the nearest store where you hold a loyalty card. When it comes to supermarket shopping the old-fashioned strategy of writing a list and sticking to it, is a simple way to bypass impulse buys. And don’t be blindsided by ‘exclusive’ specials, check the unit pricing figures (you’ll find these on price tickets attached to store shelves) to see which products offer the best value.
Be aware too, loyalty schemes give stores valuable insights into your buying habits, so chances are you’ll receive personalised emails or newsletters targeting your favourite products. Of course, this is all designed to encourage us to spend more. If you’re easily persuaded by these, consider unsubscribing or opt out of the program altogether to shop freely without any unconscious bias to a particular store or service provider.