The biggest third party marketing deal since big oil was allowed to team up with big groceries to screw little petrol retailers and smaller supermarket chains is underway with the announcement of an exclusive Heads of Agreement between Woolworths and Qantas for a loyalty alliance.
The CEO of Woolworths, Michael Luscombe and the CEO of Qantas, Alan Joyce will reveal more in Melbourne this afternoon, well past the bed time of the Saturday newspapers or any chance for in-depth analysis.
The announcement says “customers to be rewarded from check-out to check-in” and continues:
From mid-2009 the new relationship will allow Woolworths customers who participate in the Everyday Rewards program to earn Qantas frequent flyer points when they shop for groceries, fuel, packaged liquor, general merchandise or electronics at a participating Woolworth’s group business.
It is too soon for the ACCC, which rolled over on the original food-for-petrol deals, or Virgin Blue, to comment on the anti-competitive risks that leap off the page of the joint press release.
That release even points to the prime concern about linkages between the purchase of household necessities and third parties that broke out when the discount-petrol-for-shopping dockets coup occurred.
It will extend the program beyond our existing fuel savings offer and will significantly enhance the value of being a member. No other loyalty alliance could offer our customers such rich rewards, simply for buying their everyday household needs.
Just why big brands should be permitted to extend an iron grip over the once simple process of buying everyday needs to be examined.
Does it improve the vitality of the Australian economy, or screw it down, to the detriment of price competition?
The difference between these schemes and programs like Fly Buys or points for credit card purchases is that they are universally available among retailers and not structured to confine a shopper’s choice or store or drive independent petrol sellers to the wall.
A correction to the mistaken comment about Fly Buys in the article. That scheme is owned by the Coles Myer Group that DO confine a shopper’s choice to stores owned/franchised by them. That’s what Woolworths are competing against. I have no idea of the success of Fly Buys, but judging by the question “Fly Buys?” every time I shop at Coles, or Target, or Liquorland, or a petrol station with Coles Express……….., it must have a significant number of members. It would be good to see the retail price calculations for products from these stores to see just how much we pay to support these schemes. I remember using a Coles docket once after filling up the tank and got enough of a discount to buy the Saturday newspaper! The material benefits to the consumer are neglible; to the retail super-giants they must be immense.
I think the conspiracy is a tad more prosaic than that. Woolies would have you believe that their nobility is such that they will offer you a few cents of at participating petrol stations with no impact on the actual price of groceries. If this BS is to be believed outside the strictly formal terms of BS which is allowable by the ACCC, Woolies is giving you petrol for free. Now, presumably, Woolies would also like to give you QANTAS perks for free although they are on a bit stronger wicket there because no-one can actually redeem a QANTAS frequent flyer point who is not free to travel seven tuesdays in advance.
The churlish amongst us believe that all these cross subsidization deals amount to the bundling of traditionally seperate comodities, which obscured the simple task of finding what is a fair price for any one of them alone. I do not want to have to trade off my grocery bill against some notional benefit as an airline traveler or motorist. Furthermore, I want to be able to buy groceries at a price which has not been inflated by the assumption that I will redeem some of the excess profits at a second business. But, as you indicate, the ACCC is likely to remain supine on this given the size of the companies involved.
So why shouldn’t two fo the largest users of crude oil get together?
75% of the the things you buy in a supermarket a based on petroleum (crude oil) – from plastic bags, containers and utensils to shampoo and cleaning products, to cosmetics and pharma to well….faux cream and other food products as additives?
If people only knew that they are being sold crude oil in every imaginable derivation they would fly out of these petroleum based mall-housed mausoleums and into the arms of the struggling local corner shop who sells the brands that can no longer get onto the shelves of the main supers – is it because they are not petroleum – based? This scam started when the powers that be decided in the early 60’s that the world’s currency was going to be crude oil and then successfully convinced the sellers of crude oil to accept only US dollars for it, and the rest of the world to pay for it in US dollars. Of course two countries wouldnt go along and latterly a couple more …..You guessed it – Iraq and Iran and recently Venezuela and Russia
So I say why not Qantas get together with Woolwoirths – if you open your eyes you arel able to see what is going on and hopefully make choices about what you want to do about it. Frequent flyer points by the way are 20th century. That whole scam is a dead duck and should be binned forthwith.. Every frequent flyer can tell you that!