Popular in the United States, premium retail membership programs are becoming more and more popular in Australia and a number of high-profile retail groups have now introduced paid membership programs with a range of benefits for Australian shoppers. But are they worth it? Does the value you get match the price you pay for membership?

What are premium retail memberships?

 

Retail membership programs are paid programs that offer a range of special discounts, extra services, or special delivery options on eligible items to customers who pay a one-off, annual or other subscription fee. They differ from free loyalty programs like Flybuys or the Woolworths Rewards Program in that you are required to pay a fee to access benefits.

Both Flybuys (Coles, Kmart, Target and Bunnings) and Woolworths Rewards (Woolworths and Big W) allow shoppers to accrue points and then redeem those points for benefits. In some cases that means discounts on purchases, items that are available at a significant discount because of redeemed points, or gift cards that can be used for subsequent purchases. Retailer Bunnings Warehouse offers the free PowerPass program designed to provide ABN-holders with a trade discount along with a number of credit products and other benefits. Each of these programs, though, is free and there are no ongoing membership fees. With a premium membership program, you pay upfront but you get access to benefits immediately without having to accrue points.

One of the first premium retail membership programs in Australia was introduced with the launch of American retailer Costco - its Gold Star Member program. More recently, well-known Australian retailers have joined the trend, offering their own premium retail membership programs. In 2022, Kmart, Target, Bunnings Warehouse and Coles - retailers owned by the ASX-listed Wesfarmers Limited - joined forces to offer OnePass.

The question now is whether these  subscription programs can offer enough benefits to outperform their free counterparts.

 

What is Costco Gold Star membership?

 

Unfamiliar to Australian shoppers when it was introduced when Costco's first Australian store opened in Melbourne's Docklands precinct in 2009, the Gold Star membership program initially received mixed reviews. Some Aussie shoppers balked at the idea of paying a $60 annual membership fee for a Costco shop card before setting foot in a shop. Buying a single item at Costco required a 1-Year Gold Star membership subscription. 

But the bulk retailer's offer of cheap groceries, bulk household stables, competitive prices, and additional savings on in-house and well-known brands were enough to convince customers that paying up-front for membership was worthwhile.

A second type of membership - business registration - allows small businesses some additional benefits like the ability to advertise on Costco's in-store warehouse business board.

Combined with infrequent membership fee increases, the Gold Star membership program has proved popular and the bulk groceries retailer has continued to open new warehouses throughout Australia. But the pay-before-you-shop approach - referred to  by the New York Times as "the price of admission" -  still has its detractors. The idea of paying for the privilege of shopping doesn't sit well with many Australians given the myriad cost-free shopping experiences available. 

 

What is OnePass?

 

OnePass is a new (2022) subscription membership program that brings together well-known retailers Kmart Australia, Target, Bunnings Warehouse and Coles. Each is owned or part-owned by Wesfarmers Limited. In 2021 the Flybuys loyalty program was extended to include Bunnings, which already had its own PowerPass program. Bunnings has now been included in the OnePass program. Also included is online retailer Catch.com.au.

OnePass membership requires a monthly subscription of $4 or an annual subscription of $40.

For each retailer, the benefits of OnePass differ slightly. In the case of Kmart, members get free delivery on eligible products with no minimum spend. Eligible items are noted online. The same is the case for Target and Catch.com.au, with free delivery on items marked with 'free delivery' on each retailer's website. For Bunnings Warehouse OnePass customers, the program offers free delivery on "standard parcel size" orders valued at $80 or more.

Supermarket giant Coles has been referenced in program promotional material but specific benefits are yet to be outlined. In late 2023, streaming service Disney+ was added as a partner and OnePass subscribers can now sign up for a OnePass bundle that includes a discounted Disney+ subscription for $14.99 per month.

Given Kmart, Target and Bunnings each offered and refined (to the point of strong, positive feedback from customers) their Click-and-Collect services during COVID 19 lock-downs, free delivery on some items might not seem like a huge benefit given the cost of a OnePass subscription. The OnePass team seems to have recognised this and introduced a number of immediate annual membership bonuses:

• $5 credit for each $50 spent in-store at Kmart.
• $10 credit when you first activate your membership card with Target
• A welcome pack with gift card and beverage vouchers at Bunnings.

It remains to be seen if these benefits are enough to establish OnePass as a competitive program against free loyalty programs, some of which partner with the same retail brands.

 

So, are they worth it?

Unsurprisingly, the answer is, "it depends what you're looking for".

If you live in a regional area or in an area where parking at your local shopping centre is inconvenient, the idea of paying $4 a month for free delivery on some products from some of your favourite retailers might be appealing. Likewise, if you find yourself wanting to buy staple groceries in bulk and you have the storage space, paying $60 a year for the opportunity to shop at Costco might be worthwhile.

What is certain is that premium retail membership programs have been popular enough that other retailers and retail groups will follow suit. The number of programs will likely increase in the same way as the number of streaming services has increased in recent years. Costco was once on its own in the premium retail membership space, but the entry of a corporate giant like Wesfarmers means we can expect other programs to be launched very soon.