Safeway outlines three future growth platforms: Wellness, loyalty and fuel
NEW YORK — Safeway will package $150 million in real healthcare savings into an overall wellness strategy to be implemented over the course of 2013, the grocer’s chairman and CEO Steve Burd told analysts Thursday morning at the Goldman Sachs 19th Annual Global Retailing Conference.
Those $150 million in healthcare savings was realized by Safeway over the course or the past seven years. "We’ve contained our healthcare costs across an organization of 175,000 people. We have a lower healthcare cost in this company today than we did in 2005," Burd said. "[In] 2005, we spent about $1 billion; last year we spent about $850 million in healthcare. So we have [come up with] a way of ‘productizing’ the things that we’ve learned and providing products and services to our consumers."
Safeway’s wellness play has been in development for more than two years now, Burd said. "We are working with a partner who has innovative technology, so it’s not just us," he said. 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."
Safeway’s wellness strategy was one leg of three core sales-driving pillars outlined by Burd, the other two being Safeway’s Just for U loyalty program and its fuel loyalty program.
Just for U is a digital marketing platform that delivers personalized offerings to the 4.1 million shoppers who have registered for the platform, or presently, 23% of Safeway’s regular shoppers. "We have the best repurchase rate of any program in the retail business," Burd said, "because it’s very targeted to the shopper’s history." The program has expanded nationwide in the past few months, and Just for U shoppers are already accounting for 36% of Safeway sales. "We believe by the end of this year, 45% of our sales will be represented by registered Just for U applicants," Burd said.
Of the 4.1 million Just for U registrants, some 1.4 million are not active users, representing a "huge opportunity" for Safeway to connect with those shoppers and pull them into their stores, Burd said.
Safeway also has the potential to double its Just for U registrants today, Burd said, limited only by the penetration of smartphones and tablets into households. "In five years, that number will approach 90-plus percent. So in divisions where we’ve been able to launch the mobile application simultaneously with Just for U, about 31% of our Just for U registrants use the mobile application."
The third pillar, fuel loyalty, is delivering significantly higher identical sales, Burd said. Of the 343 fuel stations that Safeway operates in the U.S. market, comparable sales are higher by some 3.4% compared to stores without fuel. Couple Safeway’s fuel loyalty platform with its Just for U initiative, and you have the capability to personalize fuel savings to the shopper, Burd said. "If the standard offer is 10 cents per gallon reduction in price for every $100 accumulative spend, I can make that for individual shoppers anything I want for any time horizon I want, and I only do it where I get an incremental lift in sales," he said.
Safeway is extending its fuel program in the fourth quarter with other gas companies so that consumers shopping a Safeway without a fuel station can still be incented by the program. "We recently finalized an agreement with a large branded partner, and we’re in advanced discussions with a second partner," Burd said. "Agreements with these two partners will take our fuel rewards coverage program [from] about 23% of stores in the U.S. to about 93%." That fuel station network will grow from 343 to more than 2,200, Burd added.
Great vision, especially on wellness. I could see Safeway partnering with channel partners who could help them scale with corporate customers. Their combined corporate - retail reach would be staggering.
FDA advisory committee recommends approval for Novartis cystic fibrosis drug
EAST HANOVER, N.J. — A panel of Food and Drug Administration experts is recommending that the agency approve an experimental drug for cystic fibrosis made by Novartis, the Swiss drug maker said.
The FDA Anti-Infective Drug Advisory Committee voted 13-1 in favor of approval for tobramycin inhalation powder in patients with cystic fibrosis whose lungs contain Pseudomonas aeruginosa bacteria, or Pa, which is the leading cause of loss of lung function in people with the disease. The FDA is not bound by advisory committee votes when deciding whether or not to approve a drug, but usually follows them.
The panel’s recommendation was based on results of three phase-3 studies of tobramycin inhalation powder in more than 650 patients aged 6 and older, of whom 425 received at least one dose of the drug. Novartis said the studies found that treatment with the drug improved lung function.
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Tom’s of Maine develops SLS-free, flouride-free whitening toothpaste
KENNEBUNK, Maine —Tom’s of Maine has introduced its new Botanically Bright whitening toothpaste, a sodium lauryl sulfate-free and fluoride-free toothpaste that promises to give your mouth a foamy, clean feeling while helping to naturally whiten your teeth.
"Our consumers have been asking us for a SLS and fluoride-free whitening toothpaste where they don’t have to compromise on taste or foaming action, which we heard they experience in some SLS-free toothpastes," stated Matt Smith, senior brand manager of oral care at Tom’s of Maine. "Our innovation team created Botanically Bright to give consumers a SLS-free, fluoride free toothpaste that would not only whiten their teeth, but would also give them that enjoyable brushing experience they are looking for."
Tom’s of Maine Botanically Bright features a blend of botanicals, such as chamomile flower, certified organic aloe, bee propolis and plaque-reducing xylitol as well as stevia extracts for sweetness and pure peppermint and spearmint mint oils to freshen breath. Botanically Bright helps remove plaque with regular brushing while naturally-sourced silicas whiten teeth without using bleaching ingredients.
Botanically Bright whitening toothpastes are available in two flavors: Spearmint with Aloe & Chamomile and Peppermint with Xylitol & Propolis. The suggested retail price is $5.99.
As with all Tom’s of Maine products, Botanically Bright contains no artificial ingredients, synthetic additives and no animal testing or animal ingredients. It is also Kosher and Halal certified. In addition, the company gives 10% of profits back to the community.
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