The long-running Air Miles rewards system could face turmoil after one of its only remaining national grocery chains withdrew from the program, according to experts in Canada’s loyalty points industry.
In early June, the Canadian grocer Empire Company Ltd. announced it would switch loyalty programs to Scene+, best known for its acceptance by Canadian movie chain Cineplex. Empire owns Sobeys, in addition to Safeway, Foodland, some IGA stores in Canada, FreshCo, Needs, Thrifty Foods, Les Marches Tradition, Rachelle Bery and Lawtons Drugs.
The change will occur between August 2022 and the first months of 2023, with Sobeys becoming a one-third co-owner of Scene+ alongside Cineplex and Bank of Nova Scotia.
Industry watchers say it’s a change in Canadian habits that Air Miles may struggle to recover from after years of shoppers rolling out the familiar Air Miles credit cards at stores such as Safeway. and Sobeys.
“To say this is even the final nail in the coffin might be a little dramatic, but it wouldn’t be too far off,” said Ricky Zhang, founder of Prince of Travel, a website that tracks and compares rewards systems. travel to Canada.
“The loss of the Sobeys and Safeway partnership is truly a blow, and it’s just the latest in a series of blows they’ve suffered over the past few years,” Zhang said. These blows include the loss of the Liquor Control Board of Ontario and Lowe’s hardware stores from the Air Miles network in 2021. In addition, Staples Canada will no longer offer Air Miles starting in July 2022.
According to Zhang, Air Miles has been one of the weaker options in the Canadian loyalty market over the past few months, and these developments aren’t going to help matters.
“Air Miles, last year, had tried to rebrand itself and come up with an updated flight rewards redemption system for people to use their Air Miles,” he said in an interview with CBC Radio. . Cost of life.
“He didn’t seem to add any additional value compared to before. And so I find the program is unfortunately in a bit of a stagnant state.”
Air Miles parent stock nearly halves
It’s not just observers who say Air Miles is in trouble without Sobeys. The markets reacted badly to the announcement.
After news broke that Sobeys and its other brands would be exiting Air Miles, the company’s stock price plummeted more than 40%.
Although there were significant swings in many stock markets in the days following the announcement of Sobeys, Air Miles’ parent company stock, which trades as LYLT on NASDAQ , has not risen and fallen with general trends in the days since. The stock fell after Sobeys and Safeway pulled out and stayed where it was.
If you’re already an Air Miles collector, I think the future looks dimmer than bright.– Ricky Zhang, princeoftravel.com
According to stock filings and press releases from Air Miles’ parent company, Loyalty Ventures, Sobeys accounted for approximately 10% of the parent company’s earnings in 2021 (before interest, taxes, depreciation and amortization).
Sobeys stores, along with Safeway and its other brands in Canada, generated more than C$21 million in revenue for Air Miles’ parent company last year, according to calculations taken from annual financial statements.
The company does not just sell data, but points itself
Rewards systems such as Air Miles work by selling points to retailers, which they distribute to customers as an incentive to shop. The reward company uses the money from the sale of these points to purchase the rewards.
Although Sobeys did not agree to an interview with Cost of lifehe told The Canadian Press that the grocery chain didn’t have to pay for its co-ownership status in the Scene+ program because of the “opportunity” it offered.
“They’re likely to take a larger share of the overall profit,” said Erin Murray, vice president of marketing at Points, a technology company that works with dozens of rewards companies around the world, including Air Miles, Aeroplan, IHG and Hilton Honors. .
Cost of life8:47Is this the beginning of the end for Air Miles?
According to Murray, when a company has its own rewards program (or at least a significant part of it), it can ensure that everything the program does aligns with the retailer’s goals instead of having to cooperate and negotiate. with an external affairs.
“They’re moving in with a stake in the property… They make sure that however [loyalty program] members are rewarded is entirely consistent with their overall goals,” Murray said.
Air Miles says the sky is clear
For its part, Air Miles said it was confident it could turn this into a “growth opportunity” and stressed in public statements that Metro grocery stores in Ontario would still accept the rewards card.
The company said customers can earn Air Miles at hundreds of stores that may not accept the card in person through an online shopping portal. He also said new deals were being developed, but would not provide details to CBC Radio.
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In an interview, the company said Cost of life that the departure of Sobeys could make room for another grocery store or chain to join the program. However, with other major grocers such as Loblaw or Save-on-Foods offering their own internal point systems, it’s unclear which retailers would remain offline, so to speak.
“We have many great conversations with many brands that haven’t been able to engage with our models in the past,” said Rachel MacQueen, senior vice president of marketing at Air Miles.
Air Miles remain available on major credit cards, such as those from BMO and American Express.
“Our credit card partners let you earn miles wherever you shop. So no matter what grocery store you shop at, when you pay with an Air Miles credit card, you’ll earn miles,” said MacQueen.
The Air Miles executive also pointed out that the company offers an important benefit to its member retailers: cross-promotion to new customers.
For example, someone who needs fuel for their car but also makes purchases at an unrelated business that offers Air Miles may see a Shell gas station rewards offer without having been to Shell.
“So collectors who don’t currently shop at Shell… Shell can now offer customers deals they don’t currently have with them. An incentive or motivation to say, hey, come and stock up at Shell and get miles,” MacQueen says.
With ten million collectors, according to MacQueen, this potential is not negligible.
Should I switch to Scene+?
Either way, Sobeys and its affiliate banners have indeed sneezed at this potential. Air Miles will not be awarded at Sobeys stores in Atlantic Canada until August 2022, with the rest of the country following suit by the end of March 2023.
Canadians who love their Air Miles won’t have to worry about losing them at this point, because the reward system isn’t going anywhere.
As an alternative, the Scene+ program through Sobeys promises more rewards than movies, like travel. In an emailed statement, Scene+ co-owner Scotiabank said free groceries will eventually become an option as well.
But reward maximizers like Zhang point out that if you were relying on groceries to save up points for a free dream vacation, you’ll have to rethink how you get your free stuff because it could take you a lot longer to get enough. points without weekly trips to the supermarket. .
“If you’re already an Air Miles collector, I think the future looks bleaker than bright,” Zhang said.
Those looking for the best bang for the buck say that if you’re a few thousand miles away from that trip to Hawaii, but still got your miles at Sobeys, you might not be able to hit your goal on your travel timeline. ‘origin.
If you want to go by jet, you will have to earn a lot more and quickly — by August if you are in Atlantic Canada.
Or you can always settle for a blender instead.
Cost of life airs weekly on CBC Radio One, Sundays at 12:00 p.m. (12:30 p.m. NT).
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