Do supermarket loyalty programs actually save you money?

With Woolworths lifting prices on Everyday Extra members, consumers and advocates are questioning whether loyalty programs are worth it.

Major supermarkets have been dragged through the mud of court cases and government inquiries in recent years, but it turns out quite a few of us still have faith in the loyalty schemes we've signed up to with these retailers.

A recent survey by consumer advocacy group CHOICE found 54% of Australians believe reward programs at big supermarkets are helping them save money.

Those who have entered into loyalty arrangements with Coles or Woolworths estimated that these were saving them over $200 per year on average.

But recent hikes to membership fees and backsliding on where loyalty points can be used has put some shoppers offside.

So do these programs actually help you save? And what should you be doing to get best value for money?

Why Woolworths' Everyday Extra membership now costs more

Earlier this month, Woolworths shook up how customers pay to be a member of its Everyday Extras loyalty tier, taking away the option of an annual fee and leaving only a monthly model.

The move to charge everyone $7 per month leaves members paying 20% more overall for the same benefits, something Woolworths customers took to Reddit to complain about.

The change comes after previous cuts to perks: last year, Woolworths stopped letting Everyday Extra members redeem a monthly 10% discount offered under the scheme at Big W.

At the time, Woolworths said Big W prices were already so low that there was no need for the discount.

Woolworths' shift to monthly billing for Everyday Extras brings it closer into alignment with Coles, which has a paid loyalty scheme with similar benefits that also costs $7 per month.

Do Aldi, IGA and Harris Farm have loyalty schemes?

IGA promises "real rewards, not confusing points programs" with its scheme, which lets you earn "IGA Cash" when you buy certain products at participating stores. You can then use these cash points to reduce the cost of other items at the checkout.

Harris Farm's "Friend of the Farm" scheme, meanwhile, gives you 5% off all vegetables.

Aldi currently doesn't have a customer loyalty scheme and Money understands it has no plans to introduce one.

Do supermarket loyalty schemes really save you money?

Seasoned shoppers are sceptical about whether any of these programs actually save you money in the long run.

Savings expert and host of The Joyful Frugalista podcast Serina Bird cancelled her Woolworths' Everyday Extras after a year because "it really wasn't worth it".

She believes its value for money has degraded further after the company scrapped the monthly Big W discount, and says the monthly discount at Woolworths only pushes members to spend more.

"It really encourages [you to go]: 'Oh well, I better buy more this shop so I can get the discount'," she says.

"Once you start shopping, it's pretty hard to get out of there without a big shop... [you buy] things you probably wouldn't otherwise have bought."

Price survey questions cost of loyalty

Research released last month by CHOICE found taking advantage of basic loyalty perks offered by Coles and Woolworths would likely leave you still paying more for your groceries than if you'd just gone to the supermarket with the cheapest shelf prices.

To find this, CHOICE took data it collected every quarter of last year on how much a basket of similar goods was costing at major supermarkets.

It then worked out how much it would cost to buy a sample basket at Coles, Woolworths and Aldi every week of the year.

It then applied the savings you would get if you were a member of the free or lower-tier paid loyalty schemes at Coles and Woolworths.

These are the $10 discounts you get with Everyday Rewards and Flybuys upon reaching 2000 points, which you would also get with Everyday Extras and Coles Plus Saver, along with the monthly 10% markdowns provided to members of these tiers.

It also factored in the cost of these paid tiers, using the $7 monthly charge for both in order to maintain consistency.

CHOICE found people who had spent the year shopping at Aldi would have spent less than those who had shopped at Woolworths or Coles and applied the discounts mentioned above.

However, it's worth noting that CHOICE's analysis relied on a basket of goods it says is smaller than most people would be buying week to week and didn't take into account grocery specials, possible savings on fuel and insurance offered by some loyalty tiers and personalised opportunities Coles and Woolworths gives members to earn extra points.

How to get the best value from your loyalty scheme

Experts say choosing particular ways to redeem points you've accrued can provide better value for money.

David Moloney, CEO of consultancy Internal Consulting Group, is the author of recent book Points, which examines loyalty schemes and how best to earn and use reward perks.

He argues consumers should be using loyalty points in a way that lets them have a positive experience, rather than just buying more physical goods.

More valuable ways of using points, he says, include transferring them to a linked airline scheme to use for a holiday or putting them towards concert tickets.

"What I recommend is that people think very hard about the experiences that they can get access to, because then you're really creating the value," he explains.

"The very best reward is not to buy a toaster, because physical goods of any form don't resonate for very long as a source of happiness... what consumer should be doing is steering points towards experiential rewards."

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