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Safeway’s Just for U loyalty card program will bolster sales through rest of year

BY Michael Johnsen

PLEASANTON, Calif. — Safeway is looking to its recently launched Just for U loyalty program, which this month became available across all U.S. divisions, to help drive a positive sales story through the rest of the fiscal year. The key differentiator for that program is Safeway’s ability to personalize the loyalty card experience to a factor of one.

"Registration is on track," Steve Burd, Safeway chairman and CEO, told analysts during a conference call late Thursday morning. Safeway is capturing approximately 70% of its customers into the loyalty program.

"The conversion to regular use is running 20% greater to what we initially anticipated," Burd said. "The incremental spend for that casual user is more than 50% more than anticipated." Burd projected that about 35% of Safeway’s business will be comprised of Just for U participants by year end, and between 65% and 70% over the next three years.

The Just for U loyalty program includes a mobile app that significantly enhances participation, Burd said. "Mobile users use Just for U 50% [more often] than those who are confined to a desktop."

The true benefit with the loyalty program, Burd noted, is Safeway’s ability to personalize offers to individual customers. "We stand here as the first retailer, clearly food retailer, to have this kind of personalization [associated with a loyalty program]," Burd said. "We have countless examples of people who used to spend $50 with us now [spending] $150 with us. We want more of that."

Burd expected competitors to ramp up their loyalty card programs to match the Just for U personalization, but that it will take some time. "I believe that others will follow [but] to get to our current level of play, [it will be a] minimum of 18 months, maybe longer."

In the meantime, when competitors position a new store alongside one of Safeway’s banners, there is an opportunity to stem and even reverse any share loss. And it’s because Safeway can identify consumers who may find that new store appealing and target them with deals that will keep them in Safeway.

Another benefit is that the loyalty program enables Safeway to target price-sensitive consumers with different promotions versus consumers who are not as price sensitive. "Over time, the shelf price becomes less and less relevant," Burd said. "There is an infinite opportunity to give the individual what they want and what they need. That’s why we’re successful right now."

The ability to target the individual consumer, that’s the future of brick-and-mortar retailing, Burd said. "Those who survive in the conventional space will be about personalization," he said. "It [will be] the only way for them to compete with the Internet."

Sales and other revenue increased 1.9% to $10.4 billion in second quarter 2012, primarily due to higher fuel sales and an identical-store sales increase of 0.8%, excluding fuel and partly offset by a lower Canadian exchange rate. "We are encouraged to see that our volume trends are improving as inflation has eased, and we are pleased to see market share gains in the grocery channel and a slight gain in market share in all food-related channels," Burd stated.

Safeway reported income from continuing operations of $121.7 million (50 cents per diluted share), down 16.6%, for the second quarter ended June 16.

Safeway invested $219.2 million in capital expenditures in the second quarter, while opening one new Lifestyle store and completing one Lifestyle remodel. Safeway also closed 10 stores, including three Genuardi’s stores sold during the quarter. For the year, Safeway expected to invest approximately $900 million in capital expenditures to open approximately 10 new Lifestyle stores, complete approximately 10 Lifestyle remodels, refurbish in-store pharmacies and develop properties through the company’s wholly owned subsidiary Property Development Centers.

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Hannah Coan joins Nestle USA

BY Allison Cerra

GLENDALE, Calif. — Nestle USA announced that it has appointed a new VP corporate and brand affairs following the retirement of executive Laurie MacDonald.

MacDonald, who worked at the company since 1985, will be replaced by Hannah Coan, who joins the company from Waggener Edstrom Public Relations, where she led communications for Microsoft’s office division. In her new role, Coan will be responsible for Nestle USA’s internal and external communications, public affairs and the Nestle USA Culinary Center based in Glendale, Calif.

Prior to working at Waggener Edstrom Public Relations, Coan worked as a team leader for numerous Nestle public relations programs — including Lean Cuisine, Stouffer’s, Buitoni, Mighty Dog, Fancy Feast, Wonka, Gerber and Nespresso — during her tenure at Publicis Consultants PR in Seattle.

"Hannah Coan brings a wealth of knowledge and experience to Nestle USA, and we look forward to having her build on the strong foundation established by her predecessor," Nestle USA chief communications officer Scott Remy said.

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NRF: Retailers should brace for surge in back-to-school spending

BY DSN STAFF

WASHINGTON — A survey released by the National Retail Federation and conducted by BIGInsight found that the average parent will spend $688.62 on back-to-school items this year, compared with $603.63 last year. Total spending is expected to reach $30.3 billion.

NRF cited an increased number of children entering elementary and middle school this fall, as well as necessary back-to-school replenishments after last year’s cutbacks, for the predicted improvements.

“When it comes to their children, there’s nothing more important to a parent than making sure their children have everything they need, even in a tough economy — and especially when it comes to back-to-school shopping,” NRF president and CEO Matthew Shay said. “We fully expect retailers to be aggressive with their promotions both in-store and online, keeping an eye on inventory levels as families look to spread out their shopping throughout the entire summer.”

When it comes to what parents will be spending the most on this back-to-school season, clothing, accessories and electronics topped the list: Parents estimate they will spend an average of $246.10 on clothes and $217.88 on electronics. Nearly 6-in-10 (59.6%) will invest in some sort of electronic device, a sharp increase from the 51.9% who planned to do so last year.

Additionally, the average person with children in grades kindergarten through 12 will spend $129.20 on shoes and $95.44 on such school supplies as notebooks, pencils and backpacks.

Despite this uptick in spending, the economy is still top of mind for many parents. According to the report, more people plan to shop for sales more often (51.1% versus 5% last year) and cut back on their children’s extracurricular activities (11.0% versus 10.2% last year.) Savvy shoppers looking to save some money will shop online more often (17.9% versus 15.3% last year) and comparison shop online (32.1% versus 29.8% last year.)

When it comes to where families will shop in order to get more bang for their buck, the majority said they will shop at department stores and online for bargains and deals. Nearly 6-in-10 (59.9%) will take advantage of department stores’ private-label offerings and exclusive product lines, up from 57% last year and the highest in the survey’s 10-year history. Parents also will scour the Internet for free shipping and other promotions. Additionally, nearly 4-in-10 (39.6%) will take their school shopping lists online, up from 31.7% last year, and nearly doubling since 2007 when 21.4% planned to shop online.

The most popular shopping destination, however, is discount stores, with 67.1% planning to shop there for school items. Clothing stores (52%), office supplies stores (42%), drug stores (22.7%) and thrift stores (14.4%) also will see their share of back-to-school shoppers. Electronic stores, popular with families looking to invest in smartphones, tablets and MP3 players for their children, will see a nice bump in traffic this year (26.3% versus 21.7% last year.)

The survey found that almost half (47.8%) of respondents are planning to begin shopping three weeks to one month before the school bell rings, up from 42.4% last year, and 22.3% already likely have made a dent in their shopping list, saying they would shop at least two months before school starts, up from 21.8% last year. Another quarter (24%) of Americans will start shopping one to two weeks before school, and 2.7% will wait until school starts. With some people having less to shop for and hoping to stock up on clearance items, 3.2% will shop after school starts, up from 2.6% last year.

Meanwhile, on the college front, NRF’s 2012 Back-to-College Survey conducted by BIGinsight found college students and their families will spend an average $907.22, up from $808.71 last year. Total spending for back-to-college is expected to reach $53.5 billion.

Combined kindergarten-through-grade-12 and college spending will reach $83.8 billion, serving as the second-largest consumer spending event for retailers behind the winter holidays.

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ManmohanManu says:
Jul-23-2012 06:10 am

Informative article. I work for McGladrey and there's a white paper on Retail on the website ( http://bit.ly/JDHmUU ) that describes current trends in US retail sector with insights from industry experts.

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