Woolies cashing in on loyalty program
WOOLWORTHS is likely to reclaim further ground from its smaller rivals as the grocery heavyweight reaps the benefits following a revamp of its loyalty program, leading analysts say.
Deutsche Bank analysts say results from their latest annual Battle for the Baskets survey suggest Woolworths, which has regained market share in the past year, has further room for growth.
Coles has been the primary victim of the Woolworths resurgence but IGA and Aldi stores have lost customers too, analysts at the investment bank say.
In a report for investors, they said the relaunch of the Woolworths loy- alty program in the third quarter last year had spurred the latest improvement.
“We believe Woolworths is likely to continue to regain the market share it lost to Coles over the past five years,” analysts Michael Simotas and Daniel Wan said.
Deutsche surveyed 2400 shoppers for this year’s report.
It found that for 10 per cent of shoppers, Woolworths’ loyalty program was the most important reason for choosing the grocer – up from 6 per cent last year.
Seventeen per cent of Coles shoppers rated the Coles loyalty program as their most important reason.
“With a significant divide remaining between the two, Woolworths still has significant potential in this area to at least catch up to Coles,” the report said.
In previous surveys, it had been loyal Woolworths shoppers who had observed the improvement at the grocer. But this year, consumers who primarily shop at other supermarkets had begun to take notice.
“These shoppers are now more open to considering making Woolworths their primary supermarket, although ( this) hasn’t fully translated into results yet,” the report said.
Coles and Woolworths would likely continue to dominate when Amazon launched in Australia because of their store networks, brand perception and access to supply, Deutsche said.
Eighty- four per cent of respondents said they did not shop online, but of that group, 43 per cent said they would be interested in purchasing from Amazon.
But 33 per cent of those who shopped online said they would not buy from Amazon because they valued the brands and in- store experience offered by bricks- and- mortar supermarkets.
“We have long held the view that Amazon will not be the end of traditional retailers in Australia, particularly not food retail,” the report said.
Independent supermarkets declined in customer preference across all categories measured, in particular in the fresh category. Aldi also suffered in the fresh category.