Safeway to Roll Out ‘Just For U’ Personalization Program

Discussion
Mar 21, 2012

At Safeway’s annual investors conference in early March, Steve Burd, president and CEO, spent 30 minutes raving about the potential of its Just For U marketing program that combines personalization and mobility.

"The offers are much more relevant than the weekly ad," said Mr. Burd. "Will we continue to do the weekly ad? We will. But I can envision a point in time where that’s not really very important."

The program lets shoppers access promotional offerings online — including special offers tailored to their purchasing history — and load them all on their loyalty card. Linking the program to their smartphone enables shoppers to carry a personalized grocery list inside stores while exploring other in-store deals.

In test-mode for two years, Just for U is gearing up for a national rollout.

For shoppers, the digital site congregates virtually any paper coupon that exists in the market. To speed up the grocery-list creation process, club deals and coupons are organized based on the shopper’s purchasing history and also by expiration date.

Special deals are also offered to the shopper on between 25 and 40 items that they buy on a routine basis based on their buying history. The deals last seven to 90 days. The goal is have the lowest price in the market. Said Mr. Burd, "If it’s carried by anyone else, particularly a price operator, we’ll feature that price operator and its price that week for that item."

Between the personalized offers and better organizing club deals and coupons, the consumer is estimated to save between 15 percent to 20 percent a week in addition to the time saved finding promotions and shopping the store.

[Image: Safeway Just For U]

Besides better engaging consumers through the overall program, the use of personalizing offers cuts down the price competition that comes from a mass approach such as circulars. Said Mr. Burd, "Your go-to-market strategy becomes a lot more invisible to your competition."

Targeting promotions based on purchase history also helps drive incremental sales and product trial efficiencies.

But mobility is expected to particularly support the program’s usage since consumers can access their offers on their own schedule through smartphones. Mr. Burd pointed to several "down-time" instances to encourage use, such as a soccer game, a commuter train, or waiting in a doctor’s office.

"This is very much like having the Safeway cloud," said Mr. Burd. "Instead of that cloud being information, say, your music that you put there, accessible through your desktop, accessible through your laptop, accessible through your mobile device, it’s information that we put there, about your personal pricing opportunities that you can access through all of those devices."

While mass marketing approaches such as circulars will still be used "for some time yet to come," Mr. Burd believes communication will be increasingly personalized.

"And so different items create a different response from different consumers and we can harness that through Just For U," he said.

Discussion Questions: Do you think Safeway has hit upon a good formula for personalized deals? What are the merits and possible drawbacks to Just For U relative to traditional deals and promotions?

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26 Comments on "Safeway to Roll Out ‘Just For U’ Personalization Program"


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Dick Seesel
Guest
10 years 3 months ago

Using a rifle instead of a shotgun for more promotional messages is a smart move by Safeway — and would be a smart move for other retailers, whether they sell food or other categories. If there is a lesson learned from the ongoing success of Amazon (beyond assortment and price), it’s the use of technology to tailor promotional offers and new product introductions to specific consumer tastes. (And “deal of the day” sites are still a step behind in developing more targeted offers.) Safeway deserves praise for moving forward on a more targeted, interactive and potentially cost-efficient way to drive more sales.

David Livingston
Guest
10 years 3 months ago

This is the same old loyalty program that every other plain vanilla grocery store chain has, only relabeled under a new name and uses a different form of technology. Can’t match Walmart on prices and can’t match the service-oriented stores like Whole Foods on customer experience. So the only thing left to do is to try gimmick marketing.

Adrian Weidmann
Guest
10 years 3 months ago

The approach Safeway has taken is definitely in the right direction. Shoppers want a personalized and relevant exchange with the brands of their choosing. Allowing the shopper to research and choose information, coupons, and offers, on their terms and time schedule develops an ongoing dialog which will in turn enhance their affiliation to the brand. Safeway must be careful not to cheapen this relationship by over exerting and pushing too many offers into this dialog. It is important to find the correct balance between commerce and trusted communication. The shopper is in control and if pushed too far they can very easily ignore you.

Max Goldberg
Guest
10 years 3 months ago

It’s a great formula if it is intuitive and actually saves time for consumers. Otherwise, it’s an interesting marketing gimmick.

Mark Price
Guest
Mark Price
10 years 3 months ago
Safeway has created an exciting program that drives personalized offers to loyal customers based on their past shopping behavior through loyalty cards, and even more importantly, through their mobile phones. This program combines value and mobility, which are two key factors that consumers today are seeking in retailers that they frequent. The program is cutting-edge and has potential to significantly impact the grocery marketplace in the United States. The goal of a data-driven marketing program is to deliver the right offers to the right customers in the right channels at the right time — and this program appears to deliver that in spades. The risks associated with this program are similar to the risks associated with any program that does not rely heavily on the store circular. The truth of the matter is that the store circular actually makes money for grocery retailer, since those retailers use manufacturer funds to pay for the cost of the circular and then pocket excess funds beyond that cost. When you tie manufacturer marketing funds to specific redemptions on… Read more »
David Slavick
Guest
David Slavick
10 years 3 months ago

It’s about time this approach is being applied at a major chain. It is one thing to put the virtual circular online, matched to your location or store of preference. Likewise, presenting “deals” online to support browsing and creation of your shopping list in advance of your trip. It is quite another to step it up and commit to personal (1:1) informed by data offers and relevant content based on what the chain knows about their shopper.

From what is described, this is not a gimmick. It appears to be finally delivering on the true potential of shopper marketing in the grocery space. Up to this point, the dunnhumbys of the world have leveraged the data to inform the merchants. I can only surmise that Safeway has created a true strategic alignment between loyalty (Club Card) members, merchant planning/buying, online, and store marketing.

Lisa Bradner
Guest
Lisa Bradner
10 years 3 months ago

Safeway addresses several important issues here, the ability to tailor offers based on buying history and coupon redemption linked to the card.

I like the notion that the Cheerios brand manager, for instance, could give a better discount to someone who buys Cheerios every week vs. the person who only buys them on deal. In a world with far less coupon breakage, brands and retailers will need to find a different way to reward shoppers.

The challenge is that this system rewards the planned shopper who knows she’s going to go to Safeway and gets online to pre-plan her shopping — in other words, it doesn’t incent someone like me who decides late in the game where to go and what to buy. I agree with David; this isn’t a good way to gain share — Safeway will have to habituate shoppers to going online and pre-loading lists and coupons. For planners, this will work but it won’t work as the only promotional strategy in the mix.

Raymond D. Jones
Guest
Raymond D. Jones
10 years 3 months ago

Dynamic or personalized promotions are clearly the wave of the future. Safeway has excellent shopper card data from which to glean shopper purchase history and target effectively.

The issue is whether they can leverage the information to develop creative personalized deals that are more than just price discounts to reward shoppers for purchases they would have made anyway.

Ryan Mathews
Guest
10 years 3 months ago

It’s a step in the right direction. Real personalization, of course, would give you discounts beyond the range of available coupons … but that’s another story.

Camille P. Schuster, Ph.D.
Guest
10 years 3 months ago

This is definitely a move in the right direction. Obviously my stores have not been involved in the test marketing, so I have no firsthand experience for how it works. Assuming valuable Safeway consumers have smartphones, want to use them in the store, and the matching of deals to consumers brings offers for things they want, this could be very successful for them.

Liz Crawford
Guest
10 years 3 months ago

This is fantastic! And it ushers in a new era of intensely personal marketing, as well as opens the door to further brand-shopper partnerships like shopper endorsement deals.

Jack Pansegrau
Guest
Jack Pansegrau
10 years 3 months ago

Just a personal anecdote with my experiences with Fresh & Easy and their Friends card. Same program with points that convert to cash on your card and regular specials I get to select. Great concept and I’m sure my dollars spent at Fresh & Easy will continue to increase. I never thought I’d stray from Trader Joe’s but now I go there only for their unique items and buy all most fresh fruits/veggies at F&E — the Friends program is an added plus that will maintain loyalty.

Ben Sprecher
Guest
Ben Sprecher
10 years 3 months ago
I have to disagree with David Livingston here. This is not a gimmick. This is a traditional grocery store leveraging the one significant advantage they hold over the Walmarts and Aldis and dollar stores and Whole Foods of the world — shopper-level loyalty data. David’s right that Safeway will never be able to compete with the low-cost operators on an EDLP basis. And they will never be able to compete with the high-end players on service. So they need to use knowledge of their shoppers to deliver value to each shopper in a way that is relevant to that person. A chain’s best shoppers drive more than 100% of the chain’s profit, and a brand’s best shoppers drive most of their volume. By collaborating on getting relevant discounts to each important shopper, retailers and brands can squeeze much more from those shoppers, while making each shopper feel that they are being rewarded and valued for the things they want to buy. The result? Deeper loyalty to Safeway and to the brands who choose to participate… Read more »
Warren Thayer
Guest
10 years 3 months ago

I don’t see this as all that revolutionary. Kroger has been doing much the same thing, with phenomenal precision and success, for years. I agree with Mark Price’s point about revenues/pocketed profits from circulars, and how this could have an impact. I also think that if shoppers actually do save 15% or 20% on their weekly shopping bills, as it says in the story here, that this 15% or 20% has to come from somewhere other than the money tree, and I’m not sure just where it will come from. Interestingly, in it’s 10-K or 10-Q (I forget which) Safeway routinely reports how much it makes from slotting and promotional moneys. It is not insignificant. Anyway, all in all, a good move for Safeway. I’m sure they’ve identified any funding problems in their tests of the program, and are confident they’ll be okay, since they are rolling it out. They may gain some share from weaker competitors, but I don’t see this changing the spots on the leopard.

Mark Heckman
Guest
10 years 3 months ago

In my mind, this is about as close to CRM Nirvana as I have seen. Kudos to Safeway and their agents for making the investment in making this happen. Understandably, this type of commitment to CRM can only happen with advocacy from the top … which is exactly what Safeway has.

This approach will require MUCH content. That means that Safeway merchants and their brands must be on board with directing some of their traditional mass content to “Just for U.” Many retailers struggle with this concept mightily.

As a shopper, this program is nearly enough to motivate me to move to California … (Well, maybe not.)

David Schulz
Guest
David Schulz
10 years 3 months ago

David Livingston’s cynicism is justified. Loyal shoppers enjoy being rewarded for their loyalty, but having a large retailer sift through your purchase history — a virutal poking around you pantry and cupboards — can creep out a shopper. This is particularly true if some of the coupons and offers are off-target. There’s a fine line between familiarity and over-reaching and unless Safeway treads cautiously, there is a the possibility it will turn off too many consumers to make the overall effort a success.

Jason Goldberg
Guest
10 years 3 months ago
Making the shopping experience more relevant to a particular shopper is always good (as long as it doesn’t damage the experience for everyone else). In the case of Safeway, personalized promotions have great potential but they need to be ready for some unintended consequences. Safeway has managed its “Club Card” program as an offline database marketing system for years, and it’s been a not real time, one-way deal. Shoppers give them a number (ClubCard # or Phone) and they get a savings. How many of those existing members gave an accurate e-mail when they signed up? How many have (or will keep) a password to log in for their personal data? Need to change the phone number you use? It can take up to 2 months. Can I log onto a Safeway website and see if the contact info they have for me is right? Nope. If Safeway intends to make their ClubCard experience more important to shoppers, they are also going to have to make it easier for shoppers to manage. If confused shoppers… Read more »
Gordon Arnold
Guest
10 years 3 months ago

“Just for U” demonstrates a lot of benefit to the customer base and the company. But it doesn’t seem to do much for those prospects that shop elsewhere. For that reason, I don’t see it bringing much in the way of making the weekly ad obsolete. There must be a positive new customer count just to insure market share stays flat. “Just for U” maybe needs a little more tweaking to reach out to and entice new customers to join in with the flock.

Martin Mehalchin
Guest
Martin Mehalchin
10 years 3 months ago

I’m going to agree with those commenters who say that this is a big deal and not a gimmick. Properly executed, the economics of a program like this are tremendous (think about the potential reductions in trip leakage and the growth in average basket size) and would far outweigh any profit from excess circular fees. Safeway is not the only one acting on this. I met last week with a technology provider who is building similar capabilities that they will sell to smaller, independent grocers and Kroger is also pushing a similar program. Personalization and enhanced loyalty programs in grocery have made sense for a long time, we’ve just finally reached the point where the technology is becoming ubiquitous, easier to deploy and is no longer cost prohibitive.

Li McClelland
Guest
Li McClelland
10 years 3 months ago

David Schutz’ comment should not be overlooked or taken lightly. There are plenty of consumers who do not like stores to be looking over their shoulders to see where their cart stops, what is in their carts, and to make “suggestions” for them based on past buying behavior. For every shopper who finds it helpful and modern there is likely another person who finds this sort of marketing to be invasive, creepy and off-putting.

Cathy Hotka
Guest
10 years 3 months ago

I’m a Just for U member and don’t understand it at all. Available coupons are displayed in random order so it’s time consuming to go through them. Then, once in the store, there are other coupons from the Sunday circular that must be carefully ripped out by hand. Instead of all this, why not just automatically grant coupon-style discounts to customers who spend a certain amount per year?

Gary Ritzert
Guest
Gary Ritzert
10 years 3 months ago

I am a Just For U user and find this to be a good program. Not everyone can be a Walmart or Whole Foods. Dominick’s does not compete with the low price leader in my market, but with this program I prefer them over Jewel for my convenience purchases. It only takes a few minutes to go through the items.

Concetta Phillipps
Guest
Concetta Phillipps
10 years 2 months ago
Yes and no. This program would be great if it actually worked well 100% of the time. Further, it would be even better if the stores themselves followed the program properly. The program is actually damaged by the poor service at the local level. Ever go into a Dominick’s and have the “Just for U” price not work? The customers are treated like criminals for speaking up about it, CS staff are extremely rude about having to deal with such problems, and their front line staff just roll their eyes and say “We know about the problems, but corporate won’t do anything about it.” In order to make such a system actually work, it needs to hit at least 95% reliability. It needs to be something that can be verified at the store level without relying on the consumer to print out their shopping list with prices in case something goes wrong. It needs to be 100% supported, from the leadership all the way down to the lowly high school kid checking people out. As… Read more »
Yusuf Ansari
Guest
Yusuf Ansari
9 years 5 months ago

Yes, delivering mobile coupons is great branding; a value creation opportunity for customers. The key challenges are the small screens of mobile devices, and understanding user intent in real time to deliver super relevant offers. iCube Super Relevancy Engine developed by Intuition Intelligence, can do it. Wipro has launched SmartOffers in partnership with Intuition Intelligence.

Kevin Brown
Guest
Kevin Brown
9 years 1 month ago

This is a very poorly thought-out program. Worse, Burd & company have tin ears regarding the massive negative feedback it created.

Customer effort is extremely high; these discounts should be loaded to the customer’s loyalty account and the customer notified of the offers. Instead, the customer has to log into the extremely slow Safeway website (most Spam blockers prevent the offers from loading) or the even worse mobile app and “add the discounts to the card.” Furthermore, elderly customers believe the savings in the flyers to be coupons, and when they are told they must spend an extra 15-20 minutes/week online approving these coupons, state exactly what they will do, go to Kroger instead.

catherine kylie
Guest
catherine kylie
8 years 2 months ago

Why isn’t Safeway going for other strategies like market development? The US has been facing difficulties in economic recovery as the unemployment rate is still around 7% and GDP growth is still modest. The number of jobs added in the month of February was 175,000 which is less than expected. http://bit.ly/QNSdp6

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