Council takes a swipe at MH Flash and Gain loyalty program

24/11/2010 10:49

The Consumer Council of Fiji reconfirms that Morris Hedstroms Flash and Gain loyalty programme is a moneymaking venture rather than a reward system for its loyal customers withthe recent decision by MH to double the points needed to redeem certain gifts under the programme. In September this year, MH revised its existing gift redemption list doubling thepoints required to redeem certain products. In 2009, MH went further and increased the $1 perpoint earned under Flash & Gain card to $5 per point making it harder for their loyal consumersto accumulate points and now with doubling the points it has made it difficult for consumers toredeem rewards.

For example, previously a cardholder could have redeemed a Morris Dry Iron with only 900points but with the revised list he/she needs 2000 points to redeem this gift. This is twice the amount of points previously needed to acquire this gift. Similarly, to obtain a 1.7 litre Morris electric kettle a cardholder previously needed 1250 points but now 2500 points are needed. The table below shows some of the gift items where redemption points have been doubled. By doing this MH is making it difficult for cardholders to redeem gifts.

No.

Reward

Old points to redeem gifts

New points to redeem gifts

Total amount spent to qualify for the rewards

Prices of products at MH’s

1

Golden Margarine (500g)

200

245

$1225

$2.44

2

Cold Power Detergent (900g)

300

400

$2,000

$4.99

3

Morris Electrical Kettle 1.7L

1250

2500

$12,500

$35

4

Modyl Electric Knife EK-120

2000

4100

$20,500

$55

5

Morris Rice Cooker(10 cups )

2500

4400

$22,000

$59

6

Morris DVD Player

5000

9000

$45,000

$139

 What’s more amusing is that some of the gifts offered under the Flash & Gain programme can be bought at a ridiculously cheap price during ordinary MH sale. For example 50g No 1 Tea Leaf can be bought by any customer for only 10 cents during MH Pagal Prices sale but MH loyal customers holding Flash & Gain cards would have to acquire 50 points by spending $250 to redeem this gift. How ridiculous is this? If MH indeed wants to reward its loyal customers than why do they need these loyal customers to spent $250 to get a product which they sell for 10cents to all customers regardless for those holding “Flash & Gain” card. No 1 Tea Leaf and Look Me Bath Soap was also distributed free during MH rebranding of uniforms a few monthsback. It is ironic that MH sees it fit to distribute certain goods free or at very cheap prices to all its customers but expects its loyal customers under Flash & Gain to first spend $10 to join loyalty program and later spend large sum of money to acquire gifts.

MH has always argued that Flash & Gain cardholders have joined its loyalty programme more tobenefit from the low prices offered to the cardholders. However, Council’s investigation has revealed majority of MH stores do not have specific specials for Flash & Gain members; instead they have general sale to the benefit of all customers. The only benefit for the Flash & Gainmembers is that they acquire points for every purchase. However, there is very little to gain forthe exclusive cardholders for their loyalty as it seems that non cardholders get better deals inordinary sale.

Council’s investigation also revealed that MH has taken off expensive and renowned brand gifts from its reward redemption list and substituted with cheaper products. For example, 700ml ofJohnny Walker Red Label Whisky which was in the previous redemption list has now been substituted with cheaper brand of wines in the revised list. Similarly, Nivea roll-on anti-perspirant protection has been replaced by Desire Black Magic deodorant which is much cheaper than the former product. Our investigation further showed that some items offered as rewards were not in stock when we checked.

The Council has always maintained that Flash & Gain was a clever and hideous marketing tact icused by MH to make money rather than rewarding its loyal customers. MH made millions of dollars by selling the Flash & Gain cards at $10 each with a free wall clock as a gift. Than the biggest retail chain in Fiji used unfair contract terms which were unfavourable to the cardholders and more in favour of MH.

The Council would like to reiterate its views that MH Flash & Gain is more a money making venture rather a system to reward loyal customers. We had lodged a complaint against MH Flash & Gain loyalty program with the Commerce Commission in December last year and the Councilhopes that the Commission will investigate this issue urgently.