Retailers are boosting loyalty programs to capitalize on bargain-hunting consumers in Australia

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As the cost of living continues to soar, many Australians are finding it difficult to cover the bills. To get more value per dollar spent, consumers are signing up for loyalty and reward programs in a significant manner. This has resulted in more and more retailers, across product categories, boosting their loyalty programs to capitalize on bargain-hunting consumers in Australia.

• In March 2023, Myer, one of the leading department stores in Australia, announced that the firm had entered into a strategic alliance with American Express. The collaboration will enable shoppers to use their American Express credit-card membership points to shop at Myer.

The department store has been expanding its connection with loyalty programs over the last 12 months, as more and more consumers are seeking higher value for their dollars. Myer, recently, also partnered with CommBank Awards and Velocity, the loyalty program offered by Virgin. These collaborations also enable members of the partner program to redeem their points with the department store in Australia.

In 2022, the loyalty program offered by Myer recorded strong growth in customer registration. Myer One, which now has 7 million members, added 600,000 new members to the loyalty program during the 2022 financial year. The strategic collaboration with American Express, CommBank Awards, and Velocity has further expanded the customer reach for Myer in Australia.

Retailers across all sectors, from car maintenance to grocery, are touting loyalty and reward programs as the key to retaining customers and driving sales and revenue growth. Coles and Woolworths, two of the leading supermarkets in Australia, are also leveraging loyalty programs to retain shoppers.

• Coles, for instance, is offering shoppers a chance to earn cookware when they spend A$20 or more in one transaction and scan their Flybuys. This announcement comes at a time when more and more Australians are seeking to upgrade their kitchen tools.

Amid the growing uptake of loyalty programs in Australia, retailers are also launching new schemes to attract shoppers.

• Kmart Australia, for instance, announced the launch of a new membership program in November 2022. The program, OnePass, offers free delivery on thousands of eligible products and other introductory spend-and-earn offers at stores. The retailer initially launched the program as an online-only offer in May 2022. However, with the shift in physical shopping, Kmart has now extended the offering for in-store shoppers with further value offerings.

Loyalty and reward programs have also been central to the growth strategies of pure-play retailers in Australia. Kogan, which reported a surge of nearly 48% in its loyalty program members and has more than 400,000 members under the program, has revealed that Kogan First program members are showing strong loyalty and repeat buying behavior.

While loyalty programs are expected to remain attractive among bargain-hunting customers in 2023, Kogan can experience a slowdown in new member registration owing to an increase in its membership program fee. Amid the inflationary pressures faced by the retailer, Kogan revealed that the annual fee for the loyalty program has been increased from A$79 to A$99 per year. 

Apart from the uptake in loyalty programs, the cost-of-living crisis is also driving loyalty point redemption in Australia.

• Commonwealth Bank, for instance, revealed that the redemption volumes were 15% higher in December 2022, compared to the same period a year before. Woolworths has also experienced a surge in redemption, with a record number of members redeeming bonus offers in December 2022. Competing loyalty program Flybuys has also experienced an uptick in the rate of redemption of reward points, as more and more Australians seek to ease the soaring cost of living.

PayNXT360 expects the redemption trend to further continue in Australia in 2023. This, coupled with the growing adoption of loyalty and reward programs among shoppers, will keep pushing retailers to experiment with their schemes. As a result, PayNXT360 expects more strategic collaborations and value-added offerings to be announced by Australian retailers from the short to medium-term perspective.

To know more and gain a deeper understanding of the loyalty programs market in Australia, click here.