With this new program, members get the same store-wide weekly specials they have always been offered, plus hundreds of digital coupons and personalized deals they can load onto their rewards card. They can create a shopping list with all of the coupons they intend to use, print them out or pull them up on a mobile device. Discounts are tied to the rewards card until they expire and adjust if the price is further reduced.
Customers can sign up with their mailing address and club card number on Safeway’s Web site or by downloading the mobile application. Safeway, with 105 stores in the Washington area, has a team of “ambassadors” that for the next eight weeks will help customers register online at area stores.
“Customers tell us all of the time that ‘if you can save me money and save me time, you’re fulfilling a big need for me.’ And those are the two key things we’re trying to accomplish,” said Steve Neibergall, president of Safeway’s Eastern Division.
He said the company spent several months developing the program in-house. “A lot of our IT resources have been devoted to this. It’s very innovative technology that’s easy to use and very convenient.”
Neibergall expects the new program to provide 10 percent to 20 percent more savings on top of the discounts offered through the rewards card. Safeway, he said, is “trying to build loyalty in a marketplace that is so fragmented and where there is so much competition.”
Indeed, the grocer is facing growing competition from traditional supermarkets Harris Teeter and Whole Foods, not to mention Wal-Mart and Target, which now carry a wider selection of food. Safeway, as part of the Just For U program, will highlight a competitor’s price on a customer’s favorite items for comparison.
Safeway’s new initiative is not the only one to use what is known in the industry as market basket analysis. The practice of tracking and analyzing consumer purchases is readily employed by CVS, Wal-Mart and Target to plan promotions, attract more foot traffic and determine inventory.
Earlier this year, The New York Times reported that Target figured out that a teenage customer was pregnant by analyzing the items she purchased, and proceeded to send her coupons for baby items. Critics decried the move as intrusive, but retail analysts marveled at the precision and implications.
“The ability of retailers to take data they collect from customers and extract behavioral information is going to be a critical competitive capability,” said Larry Gordon, a partner at The FactPoint Group, an industry research firm in Los Altos, Calif. He went on to say that competitive edge could enhance promotions and inventory management.
Neibergall of Safeway said daily delivery allows the store to easily respond to changes in demand. So he does not imagine market basket analysis will have any impact on inventory decisions.
However, he supposes it may have implications for manufacturers. “It may encourage manufacturers to make more personalized offers to customers to get them more engaged, if they see some items are not moving,” Neibergall said.