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How UAE residents shop for free Published-May 22, 2014
UAE residents buy groceries, recharge Salik, get hotel stays, air tickets and pay utility bills worth millions every month – for free.
 
Thanks to the point accumulation system through various loyalty programmes initiated by the local banks, telcos, retailers, hotels and others, UAE residents avail these points worth more than Dh7.34 million ($2 million) to buy groceries, airline tickets, hotel stays and pay utilities bills every month, said Prashant Khattar, Founder and Managing Director of Infinia Services and Solutions, a UAE-based loyalty management and payment solution company.
 
Khattar says the residents’ choice of products or services to avail through such points is based on their social status – the well-heeled prefer to go for stays in high-end hotels while the middle class mainly opt for paying their utility bills and buying groceries.
 
“Different salary segments want different things – if you earn a salary of Dh40,000 and Dh50,000, you don’t want to go to Lulu and shop with your points… they want air tickets, they want to stay in Burj Al Arab and Atlantis – free stay,” he added.
 
Priyanka Lakhani, Loyalty Planning Director at loyalty management firm ICLP, said points as rewards to incentivise repeat purchase has been a popular mechanic.
 
“In the Middle East, initial adoption of points-based programmes was slow and mainly confined to the travel sector, but today, such initiatives are available across a number of sectors... Today, loyalty programmes are an integral part of the many brands in the region and where these have been successfully launched members contribute up to 60-70 per cent of brand’s turnover,” she said.
 
“Flights and hotel stays – commonly referred to as travel rewards – are very popular in the region. This is evident in the number of travel-based credit card programmes that offer travel rewards for driving spend on credit cards,” she said.
 
Infinia’ Khattar added: “We have $35 million (Dh128.45 million) worth of points sitting with us. Every month, we do $2 million worth of sales here and it’s growing at the rate of 200 per cent year-on-year.”
 
Replying to query on any hidden charges for customers, Khattar said: “We don’t charge customers, we have an agreement with the banks. Banks don’t have to hire anybody or set up a system; we do everything for the bank – we make payment to the airlines, we communicate with the customers, so emails, text message alerts go from us.”
 
ICLP’s Lakhani said loyalty programme rewards have proven to be a particularly valuable way in which consumers can work to maintain their lifestyle without the same levels of expenditure.
 
“The extent of redemption in different programmes is influenced by what can points be redeemed for, whether the rewards are available when there is a need and how easily can these be accessed. Retail programmes tend to have higher redemption rates as these are mostly available at point of sale, usually have a transparent cash value and hence can be redeemed for discount against future purchases,” she said.
 
“Travel and hotel rewards are subject to availability of seats and room nights and may not be available when you need them. Bank and credit card rewards come at a high cost to the bank as they are purchased from third parties and hence require substantial spend on credit card before rewards can be availed. Subject to these factors redemption rates in programmes can vary from 25 per cent to as a high as 80 per cent,” she noted.
 

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