The true purpose of Wesfarmers’ ‘flybuys’ program came into sharp focus on Friday when the retail giant revealed it would be ditching Coles but hanging onto the supermarket’s prized loyalty scheme.

While many consumers may assume programs like flybuys are all about rewarding customer loyalty, experts tell The New Daily they have a second, hidden, and increasingly more important purpose: collecting data about you.

Wesfarmers itself discloses very little information about the flybuys scheme – the word ‘flybuys’ only scored six mentions in its most recent 156-page annual report – but managing director Rob Scott’s comments on Friday revealed just how much the firm values the program.

“Wesfarmers intends to retain a substantial ownership stake in flybuys, which we view as a key strategic asset and enabler of our broader data and digital initiatives across the group,” Mr Scott said.

So why exactly does Wesfarmers consider flybuys such a “key strategic asset”?

How they use your data

Every time you scan your flybuys card (if you have one), Wesfarmers recognises you and can record everything about the purchase you are making on that occasion.

This allows it to collect and analyse huge reams of consumer data – information about where you shop, when you shop, and what you buy – which it uses to tailor and adapt its business to constantly evolving consumer habits.

E-commerce and retail adviser Scott Kilmartin said that while loyalty programs were once almost exclusively about keeping customers loyal, they are now increasingly about data collection and analytics – a marketing strategy that was revolutionised by online retailers like Amazon, but that is increasingly being applied to physical shopping.

“All of these [bricks-and-mortar] retailers have seen the way Amazon has exploded, and it’s all data driven. Amazon has been the best we’ve ever seen at that,” he said.

“Now, if you want to dominate your industry you need to gather data and analyse it.”

In the supermarket context, Mr Kilmartin said this means finding out what days and what times what type of people go shopping. Knowing this influences when supermarkets make sure they are well-stocked in certain items, how many checkout staff to employ when, and so on.

Across Wesfarmers’ different retail outlets – Coles, Kmart, Bunnings, Officeworks, etc – it can tell you what types of products people are buying at what stores. For example, it might find Millennials are increasingly buying items like brooms or bin bags from Bunnings rather than Coles.

Should you be worried?

The privacy section of the flybuys website details all the ways they can use your data. It is pretty extensive, and includes lists of all the types of information and all the ways they use and share it.

It includes lines like this: “Using personal information, we endeavour to improve our understanding of your interests, suitability, and behaviour in relation to products, services, and offers, including risk assessments for financial products (including credit and insurance).”

It was not clear from the website whether or not Wesfarmers sells the information it gathers. Wesfarmers told The New Daily that it does not sell individual information – ie your personal details such as name, address, phone number.

Wesfarmers did not respond when asked whether this meant it sold non-personal data.

Jason Pallant, a marketing expert at Swinburne University, said consumers should not necessarily be overly concerned about how companies are using this data.

“Everyone has a right to know and should be thinking about how their data is used,” he said.

“But companies are not using this on an individual level. They’re looking at patterns across their entire customer base. If used well it has mutual benefits.”