Safeway's Just for U loyalty platform, shopping app driving optimism at the chain

PLEASANTON, Calif. — Safeway's approach to multichannel retailing — a shopping app fielding personalized, targeted promotions to members of its growing Just for U loyalty program — represents the foundation for future growth, executives noted during a conference call with analysts Thursday morning.  

"There is a much greater propensity for people who have downloaded the app to become regular [loyalty] users," Safeway's chairman and CEO Steve Burd told analysts. Burd even quantified that propensity — shoppers who downloaded Safeway's shopping app were 30% more likely to  become regular loyalty users, or users who shop often and spend heavily, and spend between 40% and 50% more than consumers who access Safeway's site from a desktop. Of the 4.5 million Just for U loyalty card holders to date, approximately 26% are considered regular users, Burd said. 

The Just for U program is expected to battle competitive threats from all quarters — other supermarket retailers, supercenters and retail pharmacy operators, Burd noted. "The effect of Just for U is to cause people to come to the store more often and to buy more when they're there," he said. "People shop multiple channels. [The loyalty program] gives them an opportunity to consolidate more business with us."

Some of the points of differentiation that set Safeway's Just for U loyalty program apart is the level of personalization, the level of predictive analysis of a shopper's needs with the segmentation of products a consumer buys regularly from products that a consumer might buy regularly. Burd noted that more than 200 digital coupons are available on the Safeway shopping app. "[We have] virtually every coupon in the market digitized," he said. 

But the Just for U loyalty program and shopping app represent only one leg of a three-legged loyalty stool, Burd said. Safeway's fuel program is the second leg and the third leg — a comprehensive wellness program — hasn't even launched yet. "The upside for Just for U really lies ahead of us," Burd said. "Think of Just for U as a communications vehicle. It might be communicating what's going on in wellness; it might be communicating what's going on in the fuel program," he added. "It's really our marketing platform for the next decade."

Safeway plans to launch a wellness platform in the fourth quarter, Burd noted during the conference call. "Wellness [will be] the biggest leg of the stool," he said. However, Burd held more definitive launch dates and specifics of the program close to the vest.

During a presentation at the Goldman Sachs 19th Annual Global Retailing Conference in September, Burd suggested that Safeway's wellness program has been in development for more than two years now. "We are working with a partner who has innovative technology, so it's not just us," he said last month. Safeway will pilot its wellness platform in one market in the fourth quarter and expects full rollout by the end of 2013. "When completed, the initiative is expected to deliver not only some strong IDs, but also a good margin and good income. And it should attract more people to our stores."

Sales and other revenue declined 0.2% to $10 billion in the third quarter ended Sept. 8, primarily due to the disposition of Genuardi's stores and a lower Canadian exchange rate, partly offset by higher fuel sales, Safeway reported. Identical-store sales, excluding fuel, were up 0.1% for the quarter.