Struggling retailer Woolworths plans to unveil a new loyalty program rewarding customers with discounts on groceries as early as Sunday, in a move that will shift the focus from its reliance on giving its customers Qantas frequent-flyer points.

It's not clear what role, if any, Qantas will play in the new Woolworths Everyday Rewards program, which has leveraged its relationship with the airline to market the program since 2009 and now has grown to almost 8 million members. Sources said Qantas and Woolworths were still negotiating the terms of a new arrangement, which would apply to purchases after the current deal expires on December 31.

Woolworths has since 2009 rewarded its shoppers with one Qantas point for each dollar over $30 spent at its supermarkets. Credit:Michele Mossop

The cost of the alliance with Qantas is understood to be a major stumbling block for the supermarket chain. Woolworths pays Qantas for each of the points, in a deal retail analysts estimate costs the company about $80 million a year. Qantas, in turn, books that revenue in its loyalty division.

One retail analyst said it made sense for Woolworths to nurture customers' loyalty with discounts on its own products. "I believe Woolworths will come away from its loyalty program and move into a transactional rewards program," the analyst said.