Whole Foods to ditch 'points' in loyalty test

After testing two versions of a loyalty program in separate markets over recent months, Whole Foods Markets appears to have settled on a winner.

The retailer informed customers in Philadelphia this week that its nascent Rewards program there — an affinity program where shoppers earned points redeemable for store discounts and events — would be switching to the model it had been testing recently in Dallas, which instead provides “members-only” discounts.

The Austin, Texas-based retailer said it made the switch based on customer response indicating shoppers preferred the simplicity of a program that didn’t require tracking and redeeming points.

Bill Kirk, an analyst at RBC Capital Markets, told SN Friday the Dallas program is also more similar to a national digital couponing initiative underway at Whole Foods, which would allow for more effective managing of the programs when the Rewards program is expanded to additional markets.

“Some shoppers like the gamification of points-based systems, but that doesn’t appear to be the feedback Whole Foods got,” Kirk said.

Whole Foods launched the Philadelphia program in 2014 and expanded the program without the points element to Dallas/Fort Worth area stores this summer. The company said then that it intended to launch Rewards nationally following that test. It was not immediately clear whether a national rollout would begin at the same time, however.

“While we don't believe this timeline should be extrapolated for national launch expectations, we are glad there are some signs of progress and refinement,” Kirk said.

Whole Foods told Philadelphia Rewards members that they would be automatically switched to the new Rewards program on Feb. 27. Customers can continue to earn points through Jan. 1 and redeem them through Jan. 27. Leftover points not redeemed before the switch will be issued a dollars-off reward.