Woolworths may have to redirect hundreds of millions of dollars into cutting shelf prices due to the poor response to the $500 million loyalty program it launched last year.

Analysts believe an underwhelming response from customers and suppliers to Woolworths' new rewards program may be contributing to weak same-store sales growth and market-share losses in Woolworths' food and liquor operations.

Suppliers have been reluctant to support the Woolworths Rewards loyalty program because they do not receive the same increases in sales volumes as they would by investing in promotions, analysts said.

At the same time, consumers have complained they are earning far less than they were under the previous scheme because rewards accrue on only select products marked with orange tickets and on special offers rather than on every dollar above $30 spent in stores.