Is the new Woolworths Rewards worth the effort?

Woolworths supermarkets released its new-look rewards program last month, with a tantalising promise to be twice as rewarding as its major competitor Coles.

Controversially, from next year the new Woolworths program won't be linked to Qantas frequent flyer points, which have been an iconic partner for the supermarket's loyalty program over the past six years.

The decision was made following research that found 60% of their frequent flyer loyalty members hadn't redeemed points in the past year, while a third had never redeemed points.

Does this mean frequent flyer points are proving to be more aspirational than practical? Woolies certainly thinks so. Its response is to stick to what people want most - cash.

Every time a Woolies customer reaches $10 in rewards dollars, they'll get that money taken off their next shop.

Except there's just one catch (of course) - the program applies to fewer than 500 items, marked with an orange ticket. With an estimated 44,000 items in store, the chances of actually selecting a ticketed item are about 1%, which makes the program start to seem like a grim game of supermarket lotto.

RateCity put the program to the test in its first week, with somewhat underwhelming results.

In a sample shop of 36 items (selected beforehand to avoid being swayed by orange tickets and specials), we found that just one item attracted rewards dollars - the crumpets - at $1.55.

That being said, for the same shop at Coles, where every item generated rewards, the total value was in fact half of this, at 75 cents.

Maybe the masterminds at Woolies had gotten their promise right after all? Of course, had we not picked crumpets it would have been a completely different scenario. Our shop would have generated precisely $0 in rewards and we would have left feeling entirely unrewarded.

But RateCity's sample shop told a much bigger story beyond rewards: price wins every time.

In our sample shop, which was not based on the cheapest options on the shelves, Woolworths came out $5.55 cheaper than Coles, which is over three times more in savings than the rewards program provided. Had we shopped based on specials and low-cost items, both baskets would have been significantly cheaper.

The moral of the story - don't get caught up in the hype. As soon as you start buying things you don't need just because they have an attractive sticker on them, then the program ends up the winner.

Coles

Total cost: $151.46 Rewards points: 151 flybuys points Actual value: 75 cents

Woolworths

Total cost: $145.91 Rewards points: $1.55 towards a $10 gift card Actual value: $1.55 (plus frequent flyer points will still be accumulated up until December 31, 2015)

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