The long-running Air Miles rewards system may very well be dealing with turbulence after the withdrawal of one among its solely remaining nationwide grocery chains from this system, say consultants within the Canadian loyalty factors trade.

In early June, Canadian grocer Empire Firm Ltd. introduced it might be switching loyalty packages to Scene+, greatest identified for its acceptance at Canadian film chain Cineplex. Empire owns Sobeys, along with Safeway, Foodland, some IGA shops in Canada, FreshCo, Wants, Thrifty Meals, Les Marches Custom, Rachelle Bery and Lawtons Medicine.

The shift will happen between August 2022 and the primary few months of 2023, with the Sobeys firm taking one-third co-ownership of Scene+ alongside Cineplex and the Financial institution of Nova Scotia.

It is a change to Canadian habits that may very well be tough for Air Miles to get well from, based on trade watchers, after years of consumers pulling out the acquainted blue Air Miles playing cards at shops equivalent to Safeway and Sobeys.

A man in a black jacket stands in front of a blurred out street.
Ricky Zhang, founding father of Prince of Journey, an internet site that tracks and compares journey reward techniques, known as the divorce of Sobeys from Air Miles a ‘main blow’ to the rewards program. (Submitted by Ricky Zhang)

“To name it even the ultimate nail within the coffin may very well be just a little dramatic, but it surely would not be too far off,” mentioned Ricky Zhang, founding father of Prince of Travel, an internet site that tracks and compares journey reward techniques in Canada.

“Dropping the Sobeys and Safeway partnership could be very a lot a significant blow, and it is solely the newest in a collection of main blows that they’ve suffered lately,” mentioned Zhang. These blows embody dropping the Liquor Management Board of Ontario and Lowe’s {hardware} shops from the Air Miles community in 2021. As nicely, Staples Canada will not provide Air Miles as of July 2022.

A row of Bull's Eye BBQ Sauce is flanked by a "buy 2 earn 20 bonus Air Miles" sign at a Calgary Safeway.
When you love 20 bonus Air Miles along with your BBQ sauce, you will be out of luck after March 2023 — Sobeys and Safeway will cease providing Air Miles throughout the nation by then. (Anis Heydari/CBC)

In line with Zhang, Air Miles have been one of many weaker choices on the Canadian loyalty market in latest months, and these developments are not going to assist issues.

“Air Miles, final yr, had tried to type of rebrand itself and are available out with a little bit of a refreshed flight reward redemption system for individuals to make use of their Air Miles,” he mentioned in an interview with CBC Radio’s The Value of Dwelling.

“It hasn’t appeared to ship additional worth in comparison with earlier than. And so I do discover this system could be very a lot, sadly, in a little bit of a stagnant state.”

Air Miles mother or father inventory sinks by almost half

It is not simply factors watchers saying that Air Miles is in bother with out Sobeys. Markets reacted badly to the announcement.

After information broke that Sobeys and its different manufacturers could be leaving Air Miles, the corporate inventory worth plummeted by greater than 40 per cent.

Whereas there have been important fluctuations in many stock markets within the days following the Sobeys announcement, the Air Miles mother or father firm inventory, which is traded as LYLT on NASDAQ, has not risen and fallen with basic tendencies within the days since. The inventory fell after Sobeys and Safeway pulled out, and stayed the place it was.

When you’re already an Air Miles collector, I believe the long run seems to be extra dim than it seems to be brilliant.– Ricky Zhang,

In line with stock filings and media releases from Air Miles mother or father firm Loyalty Ventures, Sobeys represented about 10 per cent of the mother or father firm’s earnings in 2021 (earlier than curiosity, taxes, depreciation and amortization are taken into consideration).

Sobeys shops, together with Safeway and its different manufacturers in Canada, accounted for greater than $21 million Canadian in earnings for Air Miles’ mother or father firm final yr, based on calculations derived from annual monetary statements.

Enterprise is not simply to promote knowledge, however factors themselves

Rewards techniques equivalent to Air Miles function by promoting factors to retailers, which they hand out to prospects as an incentive to buy. The reward firm makes use of the cash that is available in from promoting these factors to purchase the rewards.

Cineplex and Scotiabank are bringing Sobeys on board for the Scene+ loyalty program, and promise extra than simply free films for his or her prospects as soon as it is rolled out at grocery retailers throughout the nation by 2023. (CBC)

Whereas Sobeys wouldn’t comply with an interview with The Value of Dwelling, it informed The Canadian Press the grocery chain didn’t must pay for its co-owner standing within the Scene+ program due to “the chance” it dropped at the desk.

“They stand to take a better share of the general revenue,” mentioned Erin Murray, vice-president of promoting with Factors, a know-how firm that works with dozens of reward firms all over the world, together with Air Miles, Aeroplan, IHG and Hilton Honors.

LISTEN | Hear from the rewards firm first hand on Value of Dwelling. 

Value of Dwelling8:47Is it the start of the tip for Air Miles?

In line with Murray, when an organization owns its personal rewards program (or no less than a good portion of it), it could actually guarantee that every thing this system is doing matches the objectives of the retailer as a substitute of getting to co-operate and negotiate with an exterior enterprise.

Frozen pizza is displayed with a price sticker offering bonus Air Miles in a Calgary Safeway store.
Business consultants say Sobeys could also be attempting to take better management of the expertise its prospects have with loyalty packages by shifting away from Air Miles and right into a program it co-owns. (Anis Heydari/CBC)

“They’re shifting over with an possession stake…. They’re ensuring that nonetheless [loyalty program] members are being rewarded is totally aligned with what their general targets are,” mentioned Murray.

Air Miles says the skies are clear

For its half, Air Miles has mentioned its assured it could actually flip this right into a “progress alternative” and has identified in public statements that Metro grocery shops in Ontario will nonetheless settle for the rewards card.

The corporate has mentioned that prospects can earn Air Miles from a whole lot of shops that will not settle for the cardboard in individual by a web based buying portal. It additionally mentioned new offers are underneath growth, however wouldn’t present particulars to CBC Radio.

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In an interview, the corporate informed Value of Dwelling that Sobeys departure might go away room for one more grocery retailer or chain to affix this system. Nonetheless, with different main grocers equivalent to Loblaw or Save-on-Meals providing their very own, in-house level techniques, it is unclear what retailers would stay unhitched, so to talk.

“We’re having plenty of nice conversations with many manufacturers that have not been capable of interact with our fashions up to now,” mentioned Rachel MacQueen, senior vice-president of promoting with Air Miles.

Air Miles nonetheless stay obtainable on main bank cards, equivalent to these from BMO and American Categorical.

“Our bank card companions allow you to earn miles all over the place you store. So it doesn’t matter what grocery retailer you store with, whenever you pay with an Air Miles bank card, you are going to get miles,” mentioned MacQueen.

Air Miles didn’t have specifics about what new offers have been in a ‘growth pipeline’ to exchange Sobeys. Ten per cent of its mother or father firm’s income in 2021 was tied to the cope with Sobeys. (Air Miles)

The Air Miles government additionally identified that the corporate presents a big profit to its member retailers — cross-promotion to new prospects.

For instance, somebody who wants gasoline for his or her automobile but in addition retailers at an unrelated enterprise that provides Air Miles may even see a rewards provide for the Shell gasoline station with out having gone to Shell.

“So collectors that are not at present buying at Shell … Shell can now put presents out to prospects that they do not at present have with them. An incentive or a motivation to say, hey, come gasoline up at Shell and get miles,” mentioned MacQueen.

With ten million collectors, based on MacQueen, that potential is nothing to be sneezed at.

Do you have to change to Scene+?

Regardless, Sobeys and its affiliated banners have certainly sneezed at mentioned potential. Air Miles won’t be awarded at Sobeys shops in Atlantic Canada by August 2022, with the remainder of the nation following go well with by the tip of March 2023.

The Scene+ program is coming to Sobeys and Safeway shops in Canada. (Anis Heydari/CBC)

Canadians who love their Air Miles will not must worry dropping them at this level, because the reward system isn’t going wherever.

Instead, the Scene+ program by Sobeys guarantees extra rewards than simply the films, equivalent to journey. In an emailed assertion, Scene+ co-owner Scotiabank mentioned that free groceries will finally develop into an choice as nicely.

However reward maximizers like Zhang level out that in case you relied on grocery buying to save lots of factors for a free dream trip, you will must rethink the way you get your free stuff because it might take you for much longer to get sufficient factors with out weekly grocery store journeys.

Several blenders are displayed on the Air Miles reward miles website, ranging from 1,850 miles to 4,150 miles in cost.
If you do not have sufficient miles on your dream journey, there are at all times dream home equipment. (

“When you’re already an Air Miles collector, I believe the long run seems to be extra dim than it seems to be brilliant,” mentioned Zhang.

Those that chase the largest bang for the reward buck say if you’re just a few thousand quick miles of that journey to Hawaii, however you at all times obtained your miles at Sobeys, chances are you’ll not have the ability to hit your aim in your authentic timeline.

If you wish to go away on a jet airplane, you will must earn much more and rapidly — by August if you’re in Atlantic Canada.

Or you’ll be able to at all times accept a blender as a substitute.

The Value of Dwelling airs each week on CBC Radio One, Sundays at 12:00 p.m. (12:30 NT).
Click here to take heed to this phase or download the Value of Dwelling podcast.

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