Duane Reade recently introduced a new reward points system, and since I’m pretty certain that I am the only one who pays attention to this kind of thing, I feel the need to explore this topic a bit.
The old system was based on a 5+% reimbursement rate. Each dollar spent was a point, and 100 points was a $5 coupon, plus they round your cents up to the next dollar when computing points earned on a purchase (hence the +). However, given that coupons expired after two weeks, could not be used on the day they were earned, and were printed at the end of your receipt (making them especially likely to become lost or forgotten), it’s understood that the impact of rewards on DR’s bottom line was, in practice, way less than 5%.
Now, customers were not terribly happy with this scheme, in that they were constantly failing to redeem their hard-earned $5 coupons. So last week DR replaced their old rewards system with FlexRewards, which appeases customers by eliminating paper rebates and expiration dates*. Furthermore, they doubled the amount of points earned on purchases; two points per dollar spent is the new rate, plus the same rounding rule for change. On its face, that seems like a very pro-consumer move, and is certainly being promoted by DR as such. Not so much when you take into account another less well-advertised change: it now takes 500 points to earn a $5 coupon. So your new base reimbursement rate is 2+%, or just 2/5ths of the previous rate†.
So, unless you were failing to use 3 or more out of every 5 coupons you earned previously, you are probably making out worse under the new FlexRewards system. Duane Reade is keeping more of your money and acting like you’re getting the better end of the deal. But at least you don’t have to carry around little receipt tear-offs anymore.
*Technically you have to buy something every 6 months to keep your points from expiring.
†They also now award bonus (SuperSaver) points for accumulating rewards without exchanging them, but even at the highest bonus tier the reimbursement rate works out to something like 2.6+%.