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.
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Ninth Circuit Court of Appeals hears Medi-Cal reimbursement rate cut case
SACRAMENTO, Calif. — A coalition — which includes the California Medical Association, the California Dental Association, California Pharmacists Association, National Association of Chain Drug Stores, California Association of Medical Product Suppliers, AIDS Healthcare Foundation and American Medical Response — continues to work to block the state of California from cutting Medi-Cal reimbursement rates by 10%.
“In January of this year, a federal court issued the decision to block California state officials from moving forward with a 10% cut to Medi-Cal payments,” stated James Hay, CMA president. “Judge Snyder’s ruling clearly indicated that California’s fiscal crisis does not outweigh the serious irreparable injury plaintiffs would suffer absent the issuance of an injunction.”
In spring of 2011, the California legislature passed, and Gov. Jerry Brown signed AB 97, which included a 10% reimbursement rate cut for physicians, dentists, pharmacists and other Medi-Cal providers. Federal approval was required before the state could implement its proposed cuts.
Following the court’s ruling earlier this year, the state appealed Judge Christina Snyder’s decision, and the case was heard this week by the U.S. Ninth Circuit Court of Appeals.
"We urge the court to rule in favor of preserving patient access to pharmacy care," stated NACDS president and CEO Steve Anderson. "Many patients rely on services provided by community pharmacy, such as flu shots, medication counseling and health screenings. If implemented, the Medi-Cal cuts could compromise patient health and access to some of these pharmacy services, which would also drive up healthcare costs. Compromised care is not something patients should have to face when it comes to their health."
The plaintiffs in CMA et al. v. Douglas et al. stand by previous arguments that reducing payments in the Medi-Cal system will hugely impact access to care for patients who need it most.
“CDA has serious concerns about the state’s attempt to cut reimbursement rates, which would negatively impact patients and their ability to access care,” stated CDA president Dan Davidson. “Most adult Denti-Cal services have been eliminated, and the state’s effort to make further cuts to children’s services would be devastating to their oral health.”
Because California Medi-Cal rates are already extremely low and many prescription medications are reimbursed at breakeven rates, many providers cannot afford to participate. Kaiser State Health Facts lists California as the lowest reimbursed state in the nation.
“We expect the appeal to be met with the same verdict Judge Snyder handed down in January, which is to block the Medi-Cal reimbursement cuts,” stated Jon Roth, CPhA CEO. “It’s very clear that if the state moves forward with Medi-Cal payment cuts, access to care for patients is sure to worsen. Many pharmacists throughout the state will have no choice but to turn away new Medi-Cal patients or be forced to stop accepting Medi-Cal all together, which will end up sending California’s poorest, most vulnerable citizens to the hospital or emergency room for care. In the end, California will lose far more many than the projected savings from the cuts.”
The lawsuit was filed against the California Department of Health Care Services and the U.S. Department of Health and Human Services on Nov. 21, 2011.
“Once again, California bureaucrats continue to try to balance the state budget on the backs of some of the poorest and most vulnerable Californians,” added Tom Myers, chief of Public Affairs and General Counsel for AIDS Healthcare Foundation. “This is bad medicine and bad public policy, and we hope that the Ninth Circuit Court of Appeals finds likewise and upholds the federal court ruling from earlier this year blocking the proposed cuts."
“This lawsuit is about patient safety and not profits. EMS is the safety net for these vulnerable patients, and the state’s drastically low reimbursement for emergency ambulance services has resulted in layoffs of EMTs and paramedics, extended response times to medical emergencies and even delayed the implementation of new life-saving equipment and procedures,” added AMR’s Region CEO Tom Wagner.
CMA, CPhA and CDA successfully sued in the past to enjoin prior Medi-Cal cuts and expect to once again demonstrate that federal law, which ensures that Medi-Cal patients have equal access to health care, was not followed.
A ruling on the hearing is expected later this year or in early 2013.
One law suit was framed against North California Medical association as they wanted to cut the medical payments this year. This year in January federal court issued a notice to block California State from moving forward to decrease 10% payments as because they can't repay the serious repayable injuries caused due to issuance of an injunction. accident lawyers in virginia
Walmart spends less to grow more
BENTONVILLE, Ark. — The pace at which Walmart adds new selling space globally will remain unchanged next year, but improved productivity, more U.S. stores and expanding multichannel capabilities are expected to produce sales and profit growth.
Walmart on Wednesday held its 19th annual meeting for financial analysts and touted a dedication to capital efficiency that will see it spend between $12 billion and $13 billion in the fiscal year beginning Feb. 1, 2103 to add between 36 million and 39 million sq. ft. of selling space. That range is slightly below the projected $12.6 billion to $13.5 billion the company expects to spend during the current fiscal year and the $13.5 billion that was spent during 2010.
"We will continue to expand our physical presence through a variety of formats across our markets, while also investing in initiatives to enhance our operational excellence and further new e-commerce opportunities," said Wal-Mart Stores Inc., president and CEO Mike Duke.
Reduced spending on U.S. stores accounts for nearly all of the projected reduction in total company capital expenditures, but even so the U.S. will account for a larger share of the company’s overall square footage growth. Walmart expects to add between 15 million and 17 million sq. ft. of U.S. selling space next year, compared with a projected 14 million to 15 million this year and an actual 9.6 million in 2010.
Virtually all of the new square footage growth relates to a modest acceleration of smaller format stores such as the approximately 45,000-sq.-ft. Neighborhood Market and the approximately 15,000-sq.-ft. Walmart Express. Walmart plans to open 125 supercenters, roughly the same as last year, but said it would add between 95 and 115 smaller format stores, primarily Neighborhood Market, compared with about 80 that will be opened during the current year. While that is a relatively modest acceleration of a concept that first opened in 1998, Walmart indicated it expects to have 500 of the food and drug combination stores by 2016, up from the current 240 units.
"Supercenters remain our primary driver of growth and returns," said Walmart U.S. president and CEO Bill Simon, echoing a message he shared with analysts the prior year. "Because we see increased momentum in comp and total sales and traffic performance, we will continue to accelerate the rollout of Neighborhood Markets. Our small format provides a competitive advantage that allows us to rapidly fill in new markets and compete more effectively with grocery, dollar and drug store competitors."
According to Simon, Walmart is doing more with less and is able to expand selling space while reducing cost because real estate and construction costs have come down.
A similar phenomenon exists at the Sam’s Club division where spending of $1 billion is roughly equivalent to the prior year but between 14 and 20 units are expected to open compared to a projected 14 this year.
Spending internationally will remain roughly the same as the prior year between $4.5 billion and $5 billion, but those dollars will buy slightly less space. New international square footage next year is expected to range from 20 million to 22 million compared to a projected 21 million to 23 million this year.
Both figures reflected a reduced pace of expansion from Walmart’s original current year goal of 30 million to 33 million that was revised downward in August amid an ongoing Foreign Corrupt Practices Act investigation and a global economic slowdown.
"We remain committed to capital discipline in our new store growth. Next year, we are allocating 60% of our funding to developing our higher growth markets and 40% to developed markets," said Doug McMillon, Walmart international president and CEO. "We will point our investments toward the better performing formats, such as supercenters and discount compact hypermarkets, and we will stop or slow growth in lesser performing formats. In some cases, we have already done this, and it will be reflected in future performance."
Overall, Walmart expects to grow total company sales in the range of 5% to 7%, which means the company will be adding between $23 billion and $33 billion in sales volume to this year’s total.
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