Two retail giants in Hong Kong are locking horns to lure customers with loyalty schemes as the coronavirus pandemic wreaks havoc on consumer confidence.

Dairy Farm Group on Thursday rolled out its new customer rewards programme for shoppers to earn points when they spend money at any of the 2,000 or so shops and restaurants under the scheme, which include Wellcome, Mannings, 7-Eleven, Ikea and KFC.

The launch comes just a day after its rival AS Watson Group, which is mostly owned by Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings, revealed plans to expand its loyalty programme, MoneyBack.

Under Dairy Farm Group’s “yuu” scheme, once a registered customer’s points tally reaches a certain threshold they will be entitled to freebies such as a cup of coffee at 7-Eleven or a Portuguese egg tart from KFC.

Ronald Wong, head of marketing for yuu, said he hoped more than 1 million users would download the mobile application this year.

“It’s a milestone in the digitization of our retail businesses,” Wong said. “We feel that the best way to retain customers’ loyalty is to reward them.”

The scheme covers more than 10 brands falling under the banners of the Dairy Farm and Jardine Restaurant groups. Shoppers can earn one point for every HK$1 spent on the new mobile application.

If they shop with Hang Seng Bank’s “yuu enJoy” credit card at any designated retailer, their points will triple. Those ordering food at restaurants on the list with the card will see their points quadruple.

Wong said any spending on the card across the world, regardless of whether the brands were under the Dairy Farm umbrella or not, could earn customers rewards.

But Maxim’s, the group’s 50 per cent-owned associate that was one of the businesses targeted by hardcore anti-government protesters last year for their perceived pro-Beijing views, was not on the list for the mobile application.

Explaining the decision, Marjorie Law, Dairy Farm’s head of communications, corporate and consumer affairs for North Asia, said it wanted to roll out the scheme first for its own brands and those under the Jardine Restaurant Group.

She added when consumers spent money in Maxim’s restaurants with the Hang Seng Bank’s credit card, they could still earn points, as was possible with other businesses.

Dairy Farm’s competitor AS Watson on Wednesday announced plans to enhance MoneyBack, which currently allows over 3.7 million active members to enjoy exclusive offers and earn points when they shop at over 1,000 partner stores.

It plans to push forward its cross-business consumption reward scheme when the pandemic dies down, and is now inviting businesses to join the MoneyBack platform for free.

Under the proposal, businesses must provide special offers to its members, who could then earn eStamps when shopping.

“We hope to help businesses to do their promotion and encourage customers to shop at multiple businesses,” Malina Ngai, AS Watson’s CEO for Asia and Europe, said in a press release.

The drawing of battle lines by the two giants came as the city’s economy shrunk 9 per cent in the second quarter, a worse-than-expected slump during the coronavirus crisis. The contraction was just short of the record year-on-year decline of 9.1 per cent set in the first quarter of this year.

Private consumption expenditure, a key component of GDP measuring consumer spending on goods and services, tumbled 14.5 per cent in the second quarter from a year earlier, a deterioration from the 10.6 per cent decline in the first quarter.

Meanwhile, Dairy Farm International Holdings announced on Wednesday that sales from its subsidiaries was down 9 per cent for the first half of 2020 from the same timescale last year. Its underlying profit for that period dropped 40 per cent year-on-year.

“Overall profits were significantly lower in the first half due to reduced contributions from Health and Beauty, Maxim’s and Convenience Stores as a result of Covid-19 and its impact on customer behaviour,” its chairman Ben Keswick said.