Shoppers Optimum Scam

September 19th, 2012 by Potato

Well, scam is way too harsh, but the hyperbole may be needed to counteract all the “OMG, Shoppers Optimum is the best rewards system!” that’s out there.

I used to love Shoppers; though they’ve long been a terrible pharmacy (high dispensing fees, and we’ve experienced many frustrations with for example filling prescriptions weirdly to generate even more filling fees), I used to think that they were a pretty terrific all-night convenience store: well-lit, well-stocked, with competitive prices. And hey, Optimum.

Then that all started going away: they jacked their prices through the roof, and stopped being well-stocked on sale items. Optimum points were devalued. Customer service took a hit, and many coupons, bonus points, and sale prices were not going through at the register. The one by our house sells out of flyer items sometime before noon on the first day of the sale. I’ve almost entirely stopped shopping there (even though it’s between the bus and my house, so super convenient). To say that it’s one of the best (or to take out the qualifier entirely) because it has the highest percentage return of any loyalty program misses the catch: it’s only good at over-priced Shoppers.

There have been a few times in the recent past when Wayfare has been induced to spend $50-$100 at Shoppers due to a bonus Optimum points event. As Wayfare puts it, she only shops there on 20X the points events, and redeems her points on bonus redemption days. “It’s like 30% off!” On the surface, that looks approximately correct: you normally earn 10 points per dollar spent (truncated — so $17.40 pre-tax gets you 170 points), and points are “worth” $0.00179 each if you save up to the top tier. That works out to about 1.79% return on normal days, and as much as 42% if you only buy on 20X the points days and only redeem on bonus redemption days, and then spend exactly $200 (and not pick up a bunch of overpriced crap that you pay for at the regular rate once you’re past $200). Compare that to the ~1% you get with PC points (and only then if you qualify for the special card) or the 0.5% from Air Miles (though it may be even less than that now with the constant devaluing of points).

Here’s my thinking: yes, you get “money” back, but you can only use it at Shoppers, which is ludicrously over-priced. So you get your 30-42% back in points (including the bonus redemption at the high end), but then you have to spend those points on stuff that’s 30-42% over-priced.

I had in my head that Shoppers was roughly 30% over-priced, but I hadn’t checked it explicitly in a while. So tonight when I went shopping, I did a price comparison on a basket of 11 items at Shoppers and Real Canadian Super Store (RCSS — basically Loblaws), chosen quasirandomly (I wandered around the store and wrote down the price of stuff I might find on my shopping list, and stuck to name brands so I could compare across stores). The average was actually that Shoppers was 42% more expensive than RCSS (data at the end).

So, even on the most fortuitous bonus points days at Shoppers (20X) you spend $1.42 to get $1 worth of stuff, and also pick up $.60 in Optimum points, which you later spend to get $.42 worth of stuff. In the end, you spent $1.42 to get $1.42 worth of stuff — but paid tax on $2.02. That tax hit would mean that you’d be behind by $0.078, or just over 5%. You go to all the trouble of shopping on the 20X the points days, then saving up your points for the top tier and a bonus redemption day, and then run around the store with a notepad and calculator so you’re sure to spend as close to $200 as humanly possible… and you end up 5% behind the ball. Could have just gone to RCSS and bought on any old day (and received a bonus 1% in PC points).

To be fair, Shoppers does put stuff on sale on top of the Optimum offers… but RCSS puts stuff on sale, too, so again it’s one less variable to worry about. You could do better if the Shoppers sale price is down to the RCSS sale price and you get some kind of bonus points event (either on the collection or redemption side), but will that be true of everything you put in your cart? Sometimes, yes: when I do stoop to shopping at Shoppers, it’s to scoop up the loss leaders that are actually cheaper than other stores, and that is usually all I’ll buy. Coke and facial tissues are perennial loss leader favourites at Shoppers — though as I said above, I can’t actually do that at the store near my house since they sell out (or, as far as I can tell, never carried any inventory in the first place).

The high percentage return of Optimum really masks what a mediocre deal it is, since everything is marked up to account for that Optimum payback (which means you’re doubly screwed if you ever shop there when you’re not getting bonus points, or if you forget your card).

Items Shoppers RCSS
Nestle 90 pc Halloween chocolate $17.99 $14.97 20%
Bandaid Wetflex 45s $8.99 $5.49 64%
Tyelenol extra strength EZ tabs 150s $17.99 $12.99 38%
Tums 750 mg x 100 $5.59 $3.79 47%
Fusion shave creme $7.49 $5.99 25%
Crest mouthwash 1L $8.49 $6.49 31%
Degree deodorant $4.79 $3.49 37%
Softsoap 590mL refill $5.99 $3.79 58%
Dove shampoo 355mL $7.99 $4.99 60%
Huggies baby wipes (naturals) 184 pk $10.99 $6.97 58%
Huggies lil movers diapers 72/90 box $27.99 $18.74* 49%
Total $124.29 $87.70 42%

* – the box of Huggies in Shoppers was a 72-pack, but RCSS didn’t sell that size. The closest was a 90-pack for $23.43, so I took the price per diaper, multiplied that by 72, and put it in to get a fair comparison to Shoppers.

7 Responses to “Shoppers Optimum Scam”

  1. Netbug Says:

    Don’t forget that PC (RCSS) also has it’s own reward system if you bank with them. I have 300,000 PC points that works out to $300.

  2. Potato Says:

    Yep, but until they introduced the bonus points mastercard it was a loyalty system that didn’t reward loyalty: aside from the odd bonus points offer or coupon, you got just as many PC points shopping at Metro or Sobeys as you did shopping at Loblaws (it rewarded loyalty to the bank, not the brand).

  3. Michael James Says:

    Nice analysis. You’ve confirmed my impression that Shoppers is like a corner store that is there for convenience but not good prices. So, when I’m out of milk at 7:30 am, I’m not price-sensitive and I go to the corner store. And when I have a raging headache at midnight, I go to Shoppers for Ibuprofen. Under normal circumstances, I go elsewhere to get a better deal.

  4. Dizzy Says:

    Is it just me, or are those 20xpoints events a lot more frequent than a couple years ago? They definitely pack em in and get people adding rip off bread or other grocery items which nobody should buy at SDM to get to their $50 or whatever it is. I’m convinced though – big disclaimer that I don’t have the time or real inclination to do any analysis – that for someone who cares less about brand my local SDM is the cheapest option available to me. They always have one line of shampoo/toothpaste/plasters/vitamins/etc on sale. I have never paid $8.50 (!) for mouthwash anywhere, or $8 for shampoo. For the couple of items I am brand loyal to (floss and a pricyish facial moisturiser) again my local SDM regularly has them on sale, which I appreciate. The points are a nice bonus for us on top of that. We actually use them to buy the unavoidable-ripoff-everywhere chocolate at hallowe’en and things our families like us to bring from Canada at Xmas.

    I like Shoppers, but mostly one store rather than as a brand. Our local one is very well stocked, doesn’t appear to sell out of flyered items when I’ve checked, and is generally pleasant to visit (something highly important to me; I would pay slightly more – though I’m not convinced I do – not to have to deal with lines, tiny aisles, screaming kids, etc). Perhaps most importantly it’s also close to the library, subway and coffee shop I use regularly so it’s not an ordeal or a trip to shop there. YMMV.

  5. Potato Says:

    It’s definitely pretty variable. When I was in London, the Shoppers was reasonably well-stocked, and the line-ups weren’t too bad. The store by me here has to be the worst, for line-ups and for running out of stuff.

    They do put a crap-tonne of stuff on sale each week… but on many items 25% off still doesn’t even bring it down to the level of a cheaper competitor. There’s usually only a few things each week that are legitimate deals, at least in my experience.

    The bonus points offers do seem pretty frequent, but lately I’ve been noticing more quantized deals: spend $50, get 20,000 bonus points (“a $X value!”) — the kind of deals that seem to work out pretty well if you calculate the return at $50, but then get progressively worse if you’re not able to spend precisely that amount (also known as the Air Miles problem).

  6. Jonathan Says:

    I stopped shopping at Shoppers a while ago, found it way overpriced, but I like the analysis that vindicates my belief! Also to note that I stopped seeing shoppers in the city carry some of their own generic “life” brand products…

  7. Danish Says:

    Just went to purchase a bus pass by first buinyg a SDM gift card. Two SDM stores said they will no longer allow people to buy a bus pass using a SDM gift card. Dang! Still love the idea of the gift cards though great idea. double the points when you buy the gift card and present your Optimum card and then when you buy your stuff with the gift card and the otimum card! Win Win!!!