Is Woolworths (WOW) relaunched loyalty scheme in trouble?

Fairfax columnist Michael Pascoe wrote a piece yesterday titled "Don't like: Woolworths Rewards Card fails the social media test." It seems in the land of Facebook everyone is up in arms over the changes to the scheme which involves no more Qantas frequent flyer points and buying products with little orange tags.  It's not a good look when someone's rant on Facebook quickly gathers over 40 000 likes.

The changes Woolworths have made to the loyalty scheme do seem rather curious.  Woolies sales are declining.  They need to boost marketing, cut prices and sacrifice margins to at the very least stop the slide in sales.  The new loyalty scheme hardly looks that exciting as Pascoe points out in his column and is simply aggravating shoppers even more.  John Durkan (managing director at Coles) recently said "our profits will grow through increasing sales and increasing transactions - the margin will be what the margin will be."  Protecting high margins is a key factor that has led to the mess that Woolworths now finds itself in.  One has to wonder whether they realise how much they need to slash margins to get back in the game.

Anyway back to Woolworths new loyalty scheme.  Is it really that bad or is it just a few people having a whinge on Facebook.  The graph below shows the number of google searches for the terms "flybuys" (Coles loyalty scheme) and "everyday rewards" (Woolworths loyalty scheme).

Source: Google Trends

Back in 2009 when Woolworths launched their Qantas alliance they had a nice little spike in people googling their loyalty scheme.  Coles relaunched their scheme in 2012 and had a massive spike in people googling the term "flybuys."  Since then they have been trending up quite nicely.

Woolworths scheme however has been showing a gradual decline.  And to make matters worse with the relaunch recently "everyday rewards" has fallen further while "flybuys" has made new gains. Ouch!