ACCC Report Reveals Supermarket Loyalty Programs May Mislead Shoppers

The recent release of the Australian Competition and Consumer Commission's (ACCC) comprehensive report reveals the significant impact of loyalty programs operated by major supermarkets Coles and Woolworths on consumer behavior in Australia. According to the ACCC, over 85 percent of Australians belong to at least one loyalty program, indicating a widespread reliance on these schemes.

The report, published on March 21, 2025, highlights how loyalty programs, initially simple rewards-based tools, have evolved into complex offerings that can influence customer spending far beyond the expected benefits. The ACCC's findings emphasize that many customers might not fully understand how these programs work, leading them to spend more without realizing the true cost of participation.

Coles and Woolworths' loyalty programs not only serve as mechanisms for customer retention but also collect vast amounts of consumer data, making them potent marketing tools. The ACCC's report suggests that customers often need to spend around $2,000 to earn a mere $10 discount, equating to a discount rate of 0.5 cents for every dollar spent. This disheartening revelation may catch consumers off guard, as they may perceive these loyalty points to have a higher value than they actually do.

As a result of the report, the ACCC recommends that both supermarket giants provide more transparent and straightforward disclosures regarding their loyalty programs. It specifically called for “simple, plain-English” summaries that clarify how much customers are spending, the benefits they earn, and the monetary value of points accrued and redeemed during their purchases.

Despite the increasing participation in supermarket loyalty programs, the ACCC's findings reveal that many consumers are uninformed about the actual value they receive. The complexity of these programs often leaves consumers guessing whether they are truly getting a good deal, which can lead to misguided impressions of savings. The report noted, “Ultimately, many consumers are left to make a judgment of whether they are getting a good deal overall based on impressions or perceptions rather than clear and useful information.”

Moreover, the psychological aspect of these programs cannot be overlooked. The ACCC pointed out that the “gamification” elements, like point systems and challenges, may unknowingly encourage consumers to buy more. This technique could lead consumers to mistakenly associate shopping more frequently with earning rewards faster, thereby extending the reach of their spending.

The ACCC did not stop its analysis at merely loyalty programs; the overarching landscape of Australia's supermarket competition was also scrutinized. The report underlines that Coles and Woolworths together control nearly 80 percent of the grocery market, functioning in what can be described as an oligopoly. This dominance raises concerns about price-setting power, particularly amid rising living costs fueled by inflation.

Despite an expensive year-long investigation, the ACCC stopped short of claiming that Coles and Woolworths were engaging in outright price gouging, concluding instead that while there were significant issues in how these supermarkets interact with suppliers, there was no concrete evidence of illegal price collusion. This lack of evidence may come as a relief to the supermarket giants, as the report revealed “no smoking guns” in their pricing strategies.

The ACCC’s findings have been met with skepticism from communities and advocates who claim that the supermarket giants are not providing fair competition, especially as both companies have reported record earnings during a time of significant inflationary pressure. Treasuer Jim Chalmers reacted to the report, reaffirming that breaking up the chains holds risks that could be counterproductive, advocating for better transparency measures instead.

As part of its recommendations, the ACCC is set to review the findings on supermarket loyalty programs again in 2028 to monitor ongoing developments and assess their impact on competition and consumer outcomes. As supermarkets innovate their customer engagement strategies, stakeholders must keep an eye on whether they become more beneficial for consumers.

The implications of the ACCC report raise vital questions about consumer rights and the transparency of loyalty programs in supermarket chains, emphasizing the need to balance profit-making with fair treatment of customers. In adhering to the recommendations put forth, Coles and Woolworths have the opportunity to rebuild consumer trust and potentially reshape how loyalty programs are perceived in Australian retail.