With five quarters of increasing identical-store sales on the books, Steve Burd is a relaxed man.
The chairman, president and chief executive officer of Safeway was so laid back at the chain's annual meeting in May that he asked for compliments along with questions — and he got them.
Since Pleasanton, Calif.-based Safeway lowered chainwide pricing two years ago while maintaining the quality standards it has been using to differentiate its stores, the company has established real momentum, Burd told financial analysts at the company's annual investor conference earlier this year.
It is striving to keep that momentum going by increasing shopper loyalty, he pointed out.
“You can attract all new customers, which we try to do on a regular basis,” Burd explained, “but there's so much more value in trying to increase the loyalty of people who are already at your stores and already shopping. That is the focus of what we will do.”
To build on its momentum, Safeway introduced a personalized loyalty program called Just for U, which it will roll out nationwide by the end of the year after testing it in Northern California, Hawaii and Chicago.
“What we want to do is create a dialogue with our best shoppers, and by having that dialogue take place over the Internet, it gives us an opportunity to really personalize prices that are important to them,” Burd explained.
“Everybody has a personal price point across all commodities, and we have the ability to reflect those personal price points to them individually.”
Utilizing consumers' shopping history, Just for U allows Safeway to look at what its best shoppers are buying and, just as importantly, what they aren't buying at Safeway, then make “an attractive best-in-market offer for that item so they choose Safeway,” Burd said.
The program offers personalized deals with prices designed to beat the most relevant competitor in a given area, he explained. It also offers coupon savings that can be downloaded directly to a loyalty card, plus weekly promotions highlighting items for which there is a purchase history by each consumer.
Burd said early reports indicate Safeway had cut down the number of complaints from its most loyal customers and boosted sales by building more loyalty among them.
Andrew Wolf, managing director for BB&T Capital Markets, Richmond, Va., said the Just for U program “enables Safeway to maximize the share-of-wallet of its primary customers without blowing off everyone else.
“It is enabling Safeway to leverage its loyalty card data, the way Kroger has been able to do with Dunnhumby, though it's more computer-intensive and self-activated.”
Safeway, which has been a front-runner in expanding private-brand offerings, introduced several new lines this year, including Refreshe, initially a line of water that's been expanded to encompass carbonated beverages; Snack Artist, the chain's entry into private-label snacks; and Open Nature, a line of natural items cutting across many categories.
All three lines have been successful, Burd said. “If any branded company had the kind of sales in a brand in its first year that Open Nature has had, they would consider it a home run,” Burd said.