Coles versus Woolworths: which one is better value for frequent flyers?
Which offers the best value for money: Velocity Points at Coles through flybuys or Qantas Points through Woolworths Rewards?
With alliances forming between Woolworths and Qantas and Coles’ flybuys and Velocity this year, supermarket shopping now has the potential to top up your frequent flyer points balance. Both partnerships let you earn 1 point per dollar spent in store. But which one actually offers better value for money? We've crunched the numbers and picked the winner.
How many points will you earn?
Rather than earning points directly into your frequent flyer account, you have to transfer 2,000 of your reward points into either your Qantas account (for Woolworths Rewards points) or your Velocity account (for flybuys points). That will earn you 870 frequent flyer points in both cases. This roughly equates to 0.43 frequent flyer points earned per dollar spent at the supermarket.
So how many frequent flyer points could the average Australian earn purely while shopping at Coles or Woolies? According to RaboDirect’s Financial Health Barometer Food and Farming 2016 Report, the average Aussie spends $163 at the supermarket checkout each week. ASIC calculates the average person aged under 35 who lives alone also spends $24 on alcohol each week. That suggests you would spend at least $187 at the supermarket and its liquor store partners each week, or $9,724 each year.
Based on this average spend, our reward points calculators show that you could earn 187 flybuys or Woolworths Rewards each week, which adds up to 9,724 points each year. At an exchange rate of 2,000 supermarket points for 870 frequent flyer points, you’d earn 81 Velocity or Qantas Points per week, adding up to 4,230 airline loyalty points per year. (While both schemes will offer bonus points deals, we're sticking to what you're guaranteed to earn for this comparison.)
What are your points worth?
As both Qantas and Velocity have the same exchange rates for transferring points, it’s difficult to tell which is more rewarding at face value. Instead, you need to look at what you can actually redeem your points for to determine the best deal. To measure the full potential of your rewards, we’ve compared some of the different flights and products you could use those 4,230 points for.
What's the best deal for my Velocity points?
Let’s look at the options for Velocity Frequent Flyers first. The number of Velocity Points you’ll need for a flight will depend on the route, fare class and time of booking. For this example, we’ll look at a from Sydney to Melbourne. For an economy return flight, you'll need 7,800 Velocity Points for an economy one-way flight from Sydney to Melbourne (not including taxes and charges). Earning that number of points will take you nearly two years. The flight itself is typically valued between $125 and $335, depending on when you fly.
Another option is redeeming your Velocity Points for fuel discounts at partnered BP stations. Currently, you can take $10 off your petrol bill for 1,667 points. So with 4,230 points, you could take advantage of a $10 fuel discount around 2.5 times each year, for a total saving of $25.
You could use your points to buy gift cards on the Velocity online store. Currently, a $20 Westfield, Target or Kmart voucher costs 4,500 points, so you’d just be shy of redeeming one of these each year.
You can also purchase tech, entertainment and homewares rewards from the Velocity store. With 4,230 points you could redeem a pair of Moki Hyperbuds (valued at $17) for 3,600 points, a bottle of Absolut Vodka valued at $34 for 8,500 points after two years (valued at $34.00) or a $25 donation to AIME for 4,500 points.
These examples show that you'll take a long time to get much value from your $9,724 in annual food and booze shopping. You'll get more value from flights than any other reward, but scoring a free flight will take a while. Clearly, you shouldn't rely on food shopping as the main way of earning points. For other ways to boost your Velocity balance, see our guide on how you can earn Velocity Points.
How many Velocity Points can I earn at Coles?
What's the best deal for my Qantas frequent flyer points?
Now we’ll look at what you could redeem with Qantas with your points earned at Woolworths. You’ll need 8,000 Qantas Points for an economy one-way flight from Sydney to Melbourne (not including taxes and charges). For an average spender, it would take you just under two years to redeem this flight. A mid-week one-way Economy trip from Sydney to Melbourne typically costs anywhere between $163 and $350.
This means you'll get a flight slightly more quickly with Virgin than with Qantas, because of the lower points requirement (7,800 versus 8,000). Considering you’d need to spend over $19,000 at the supermarket and with its partners over two years to redeem this flight, it would only be rewarding if you were already a loyal Woolworths customer and were earning Qantas Points in other ways as well.
Alternative options for Qantas frequent flyers are sometimes slightly better value than the Velocity options. You can get a $20 Woolworths eGift voucher for 3,000 Qantas Points, a $25 voucher with Myer for 4,350 points, a $25 Dymocks voucher for 4,040 points, or a $25 Westfield voucher for 4,630 points.
Other options include a $25 Jetstar voucher for 3,870 points, a 750ml bottle of Leconfield Wines Syn Sparkling Coonawarra Shiraz (valued at $18) for 4,130 points, or an Apple 12W USB Power Adapter (valued at $29) for 4,490 points. As you can see, using your Qantas Points at the online store isn’t the most cost-effective way to get more from your supermarket spend. Using your points for flights offers the most value, but earning a flight will take time.
How many Qantas Points can I earn at Woolworths?
While neither scheme is going to earn the average Australian a massive amount of points, you'll get slightly better value from the Velocity/Coles partnership if you use your points for flights. If you're after gift cards, Qantas/Woolworths is slightly better value for gift cards, but again the difference isn't enormous.
Using your points for flights definitely offers the best return. Both supermarket schemes will be, at best, a small supplement to what you can earn through regular flying or a points-earning credit card.
Images: Shutterstock, Qantas and Velocity
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Note: We updated an earlier version of this post to correct a Velocity points calculation.