Rant - Shoppers Optimum Points And Our Love / Hate Relationship

I've been keeping a low profile about the recent Shoppers because of our love/hate relationship. Frankly, I feel they do a pretty good job at making me "spend" more to "save more". Now here's my take on Optimum Points - the most realistic and highest return redemption breakpoint (for me) is the 50,000 mark, where on a regular spending and redemption, works out to 1.7% return. Doing simple math, a 20x event will bump this value to 34% return.

Disclaimer: This is a lengthy rant - for a summary, see below. Note that I neither advocate for nor against shopping at Shoppers, but rather voicing consumer awareness on spending habits and avoiding shopper savings fallacies.

A 34% return sounds great on paper, but I gotta open my eyes and have a level head about things. Firstly, I need to spend at least $50 in one go, and only during the 20x points events. And at the end of it all, I need to spend my hard-earned "reward" on $85 of merchandise -- and again, all in one transaction. These two simple steps are already a large burden, but I keep telling myself that I'm "saving" 34%... but I don't "feel" the savings when I'm shelling out several hundred dollars :(

The good news is that SDM tries hard to massage that money out of my wallet but setting up "Bonus Redemption" events, and lately a pre-Christmas "Big Big Redemption" event. Here's the breakdown:

On regular redemption days:

• Redeem 50,000 points for $85 off ~ 1.7% return (~ 34% if 20x bonus)
• Redeem 95,000 points for $170 off  ~ 1.79% return (~ 35.8% if 20x bonus)

On the bonus redemption days:

• Redeem 50,000 points for $100 off ~ 2% return (~ 40% if 20x bonus)
• Redeem 95,000 points for $200 off  ~ 2.1% return (~ 42.1% if 20x bonus)

On the mega redemption days:

• Redeem 30,000 points for $60 off ~ 2% return (~ 40% if 20x bonus)
• Redeem 50,000 points for $125 off ~ 2.5% return (~ 50% if 20x bonus)
• Redeem 95,000 points for $250 off  ~ 2.63% return (~ 52.63% if 20x bonus)

What this means for me is that at my preferred 50,000 redemption mark, I would net a 50% return! To illustrate: I spend $250 on their "20x Bonus Event" on November 19th, I would qualify for $125 redemption on December 3rd or 4th. It's a great deal... but do I really need $375 of merchandise from Shoppers?

BUT... there's another route!

Shoppers also has another event going on right now where you can earn 8,000 point just for buying only $150 in gift cards. At my preferred redemption of 50,000 points (on the Mega Redemption event), that works out to $20 return for buying $150. But the problem is, there's a lot of psychology involved with how much "savings" I gained. But before I delve in deeper, here's a breakdown of the options:

Assume I start off with 0 points

If I take advantage of the 20x points on November 19th and the Mega Redemption on December 3rd or 4th:

I will spend a total of $250 to receive $375 of goods.

This would be perfect if you needed to pick up a new PS3 or Xbox 360.

If I only take advantage of the gift-card promotion running from November 5 to 18, I could spend $900 on gift cards to earn 48,000 points. Assume I have I magical way to earn the remaining 2000 points, I would net $125 in free merchandise, but lock up $900 in "gift cards"

Now my rant.

The fallacy of the gift cards is that "I bought $150 and got $20 back" wherein reality, I simply paid $150 to get $150 and the "savings" comes in the form of Shoppers' merchandise.

The fallacy of earning Shoppers' merchandise is that "I earned x points and now this entitles me to $y of free stuff". But I've failed to recognize that I have locked up a large sum of cash into gift cards to earn this reward (see Time Value of Money). Unless I was planning to spend $900 at Home Depot on a large renovation project, or gift out $900 of iTunes stocking-stuffers, the money would be locked up indefinitely in a piece of plastic that I can't use to pay my down my phone bills, hydro bills, credit card bills, or anything else that cold hard cash can do.

One can argue that I can buy gas and grocery gift cards since they are necessities that I would otherwise spend money on. However, I'm currently toting the MBNA SmartCash which would give me 3% cashback if I made my purchases directly at the retailer instead of at 1% at Shoppers. So buying the "gift cards" at Shoppers would net me 1% instead of 3%, effectively a Net Loss of 2% - the cost to gain "savings" in the form of points and ultimately Shoppers' merchandise (total $18 loss over $900 to gain $125 of merchandise). And that's an $18 loss on top of having locked ~3 months of grocery and gas spending into gift cards.

tl;dr

If you regularly shop at Shopper's and/or collect Optimum Points religiously, traditionally give out gift cards as stocking stuffers for family/relatives/Secret Santa, or you need a new PS3 or Xbox 360, then check out the upcoming Shoppers' promotions!

Otherwise, if you're more intent on "saving" a few dollars and weren't planing to purchase a few hundred dollars of merchandise at Shoppers, then don't! And if you need gift cards, consider buying them at gas/grocery stores with your MBNA SmartCash for 3% cash return.

Remember - you're not "saving" money by "spending" more. It's only the case if you had been premeditating a purchase and would have paid more otherwise.