By Janine Perrett

I must say I have a fundamental problem with the new Woolworths loyalty program drama.

It's not that they are bucking the conventional wisdom by abandoning the popular Qantas frequent flyer point tieup; though there is that.

It's not that their new loyalty program is offering "special" customers "special" discounts, which you would think would be a marketing nightmare with low prices everyday for some, but for others even lower prices some days...well you get the idea.

No, my problem is quite simply that the initial stories by esteemed business jouranlists obviously quoting sources close to Woolies claimed the whole rationale for the rather risky move is because of cost.

The stories suggested the Qantas program was costing Woolies some $80 million. That did seem expensive. That was until the estimate for the new scheme to replace it came in at $500 million.

I kid you not, a half a billion dollar loyalty scheme, according to the initial reports. Even allowing for their spin doctors in overdrive to try and sell the new non-Qantas scheme, this seemed a bit much.

Did Woolies mean to claim that a half a billion dollar scheme is a good thing? Maybe they meant not half a billion in cost, but in benefits. Whatever. It sounds ludicrous.

Already one retail analyst has warned at the danger to Woolies' bottom line if the initial promises are to be believed.

It makes you think the company must really be panicking.

Until now, one could put it down to analyst chatter about the all the pressure confronting Woolworths corporately.

After all, as I always point out, when you are in a duopoly, obviously one has to be coming second. Finally, after many years of being on top, it is Woolies' turn to be runner-up and Coles to take the top slot.

For now, Woolies smacks of desperation.