During Thursday’s first-quarter earnings conference call, grocery store chain Safeway CEO Steve Burd told analysts that the company’s highly successful Just for U customer loyalty program could reach 6 million members by year’s end. The program is less than a year old and already represents about 45% of Safeway’s sales.
Safeway’s loyalty program offers an additional 10% to 20% savings off its Club Card, and it’s driving increased purchases from consumers jumping into the “loyal” category. Safeway officials have also seen the program grow via smart phones and tablets.
Burd said the Just for U customer loyalty program “clearly” has an impact on Safeway’s same-store sales, which rose 1.5% in the first quarter.
“The Just for U user becomes more loyal and spends more money,” Burd said. “With Just for U, there is so much additional value you can bring as you learn more about the shoppers. We don’t see the sales increase from that flattening at all. The more experience you have with it, the more value you can create.”
Based in Pleasanton, CA, Safeway’s Just for U customer loyalty program offers personalized discounts based on past purchases while it drives market share gains and profits. The company also runs Vons, Dominick’s, and other chains in the U.S. and western Canada.
Safeway customers can access their Just for U account at the grocer’s website and click on the personalized offers and manufacturers’ coupons they want placed electronically onto their Safeway Club Card. The tailored offers are based on a customer’s historic purchases that Safeway collects through Club Cards.
Safeway can cut prices more efficiently through its “Just for U” personalized pricing by creating special deals on those products that an individual customer buys regularly. Just for U prices are for unlimited quantities and usually last 90 days.
Burd said the Just for U program will roll out fully in Canada during the third quarter.
“There’s a maturing effect here that will have a more pronounced effect on Canada in 2014 than 2013,” Burd said.
Burd said that the Just for U customer loyalty program has a much stronger appeal to people who are concerned about price, budget, income tax, and other related issues.
“I still believe it’s a very sluggish (economic) recovery,” Burd said. “I don’t think you have a strong economy until consumer confidence hits 90 and we haven’t seen 90 in over five years. Consumers are careful with how they spend their dollars.”
Burd said the Just for U program is about gaining share, which Safeway has done in four consecutive quarters.
“Two years ago, I don’t think people thought we could do that,” he said.
Burd said Just for U continues to grow.
“Traffic is coming from our most loyal customers and that’s a good thing and that’s what Just for U was made to provide,” Burd said. “We’re registering about 20,000 households per week for Just for U with a pretty modest marketing offer. We’re on pace for over 6 million members by the end of the year.”
Safeway operates nearly 1,700 stores in the U.S. and Canada and reported $44.2 billion in annual sales last year.