Popular Australian grocery retailer Woolworths recently announced the launch of member-only pricing, giving customers another option to spend less — not more — on their shops. This strategic shift in the Australian market mirrors a global trend, with more retailers amplifying value for members in a loyalty program amid soaring inflation and cost-of-living crises.

Woolworths Supermarkets and Metro stores introduced in-store, member-only pricing for Everyday Rewards members on Wednesday, 23 August. The member pricing, which is also available at Big W, provides discounts exclusively for in-store and online shoppers in the Everyday Rewards program. This has added a new third pillar to the ways Everyday Rewards members benefit from the program.

Three ways Everyday Rewards members benefit

  1. Earning rewards: Members earn AU$10 off their shopping bill each time they accumulate 2000 points, offering tangible benefits for their loyalty.
  2. Rewards app boosting: Members can expedite their point accumulation through the Rewards app by Boosting personalised offers, accelerating their journey towards earning discounts.
  3. Exclusive ‘member prices’: Simply by scanning their Rewards card at the checkout, members gain access to special ‘Member Prices’ in-store, adding another layer of value to their shopping experience.

This multi-faceted approach not only incentivises shopping but also strengthens the bond between Woolworths and its customers, in particular those who prefer different ways of being rewarded to the traditional points loyalty scheme.

A significant shift for Australian grocery retailers

This move signals a strategic shift in the Australian market now that the country’s largest retailer Woolworths appears committed to the member-pricing approach.

It’s great to see Woolworths testing out new approaches. We know there is a group of customers who may not respond to loyalty points schemes but will respond to discounts, so this is a way for Everyday Rewards to appeal to this group.

Member pricing is already established in Australia at retailers like Rebel Sport and Dan Murphy’s. In grocery, Coles Group and Flybuys have also been experimenting with member pricing, However, Woolworths’ move seems to be more of a long-term strategy, indicated by the Group’s CEO Brad Banducci’s note, ‘We’re starting small but have exciting plans’.

The power of savings and loyalty in tough economic times

In light of soaring inflation, high rent and mortgage repayments and skyrocketing energy bills, consumer spending is tightening. This means grocery retailers must find even more innovative ways to remain competitive. In tough economic times when many households are working within a fixed budget, immediate discounts may be more useful to customers.

As the overall global economy seems to be inching towards recession, it’s no surprise when Reeve shares that this exclusive ‘member-only pricing’ trend is gaining momentum worldwide. He explains,

This strategic shift in the Australian market aligns with a similar pattern observed among global grocery retailers, like Tesco which led the way with ‘Clubcard Prices’ in the UK. The British multinational grocer is witnessing significantly increased loyalty scan rates, especially for smaller-size basket shops with its ‘Clubcard Prices’.

Unlocking savings and enhancing loyalty with member pricing

Member pricing comes with advantages and disadvantages. In particular, retailers need to be mindful of how member-only prices are perceived by shoppers who are not in the program. However, one thing is certain, it undeniably amplifies the value for members in a loyalty program, especially in times of economic hardship. As a result, retailers with member pricing consistently see increased loyalty scan rates, especially for smaller basket-size shops.

For example, Dan Murphy’s in Australia offers member-only discounts and has one of the highest scan rates of any Australian loyalty program, with 90 per cent of sales linked to a loyalty ID. This delivers more data to the retailer and also means its program is more valuable because it can better deliver other products like personalised offers or retail media to CPG (consumer packaged goods) brands.

As for the future, it will be fascinating to see how Woolworths’ consumers and other retailers react. In the UK, we’ve seen many other retailers following in Tesco’s footsteps.

Jonathan Reeve is vice president for Asia Pacific at Eagle Eye.