PLEASANTON, Calif. — Safeway here believes it has found the key to personalized marketing through “Just for U,” the digital program it will offer chainwide by June that it sees as a primary driver of sales growth over the next few years.
“We think we’ve created a lasting change in consumer behavior with Just for U,” Steve Burd, chairman and chief executive officer, said in March during the company’s investor conference.
“Shoppers are on a constant quest to save money, and as the world becomes more digital and more mobile, one-on-one marketing will become the norm. And we think Safeway, with the Just for U platform, will be on the leading edge of that change.”
According to Burd, the marketing challenge has never been about personalization. “It’s been about the delivery mechanisms to deliver that personalized offer to the consumer,” he pointed out.
“Emailing seemed at first blush to be a powerful way to communicate because it’s very personalized. But Just for U excels at one-on-one communication because it’s information we put out there [with] personal pricing opportunities that consumers can access on their own time using a mobile device.
“When they’re signed on to Just for U, everything they do on a desktop or a tablet is stored and accessible from an iPhone.
“The whole idea is to provide what consumers want, to provide more relevance and cause them to be more loyal to Safeway.”
Bill Bishop, the Chicago-based principal at Willard Bishop — who has analyzed the Just for U program and other marketing efforts through his new online company, Brick Meets Click — has some reservations about the Safeway program.
“Burd is clearly very enthusiastic about Just for U,” Bishop told SN, “and it’s true Safeway has probably pushed personalized marketing as far as anyone today has done and Burd really believes its investment in all that data will impact the business enough to fulfill all his expectations.
“But there’s a legitimate concern that Safeway could easily overestimate the impact Just for U will have by focusing on the 20% of customers who account for 80% of sales and who are the ones most likely to use the program, while failing to reach out to those other folks.”
Another concern, Bishop said, is how Safeway markets the program. “This is the kind of thing that will appeal to young shoppers, who like to opt in and have programs designed just for them. But it isn’t clear there’s been much effort made to get them involved.”
Bishop said other companies are using data similar to what Safeway is capturing in different ways.
“Personalized marketing is fine, but contrast that with what Kroger is doing. It doesn’t get quite the same push, but it is using the data more broadly than Safeway.
“In addition to personalized offers, Kroger uses the data to make merchandising changes in stores based on average lifestyles around a given location, and it also uses the data to create different versions of ads based on how people shop.
“But as good as personalized marketing is, it gives you a relatively narrow definition of a market because it appeals to only about 20% of shoppers, so if you’re not already a regular shopper, then Safeway probably doesn’t have enough information on you to personalize its offers, and it’s overlooking what it needs to do to reach those shoppers.
“Steve Burd certainly knows that. But a lot of people miss the point that if all you do is concentrate your marketing on the 20% of the shoppers in the program, then you’re fishing in a much narrower pond.”
According to Burd, shoppers increasingly engage in a pre-shop experience on big-ticket items like a new car or a flat-screen TV, “and since a family is easily going to spend $5,000 to $10,000 a year on food, that’s another meaningful expenditure,” he noted.
“So part of what Just for U does is it takes advantage of the growing trend among consumers to engage in a pre-shop experience. For someone who does that with regularity, there’s an opportunity for us to beat competitive shelf prices by 15% to 20%. This is how we compete with the price guys because everything is personalized for each individual household.”
Burd said Just for U users are able to access offers through three areas on the digital platform: a coupon center, a personalized deals center and club specials. Safeway has 30 million unique offer sets on the platform for anyone who has shopped at one of the company’s stores in the last 12 months, whether or not they are regular shoppers.
“At the coupon center you can access virtually any paper coupon that exists in the market and any coupons Safeway may have created on its own, all stored digitally,” he explained. “You load the coupon [onto the Safeway loyalty card] and you’re done.
“There may be 14 pages of coupons, but since they’re organized based on purchase history, you probably wouldn’t go any deeper than the first three pages. And there’s no printing required — it’s all simply downloaded to the loyalty card.”
The personalized deals section includes offers on between 25 and 40 products that reflect items that consumer has a history of buying. The personalized prices on those items are good for seven to 90 days.
Some offers are only good for seven days, Burd explained, because Safeway wants to drive shoppers to the site every week.
“Our objective is to make sure those personal prices are the absolute best prices in the market, so we often indicate a reference price,” Burd explained. “If the item is carried by anyone else, particularly a price operator, we’ll feature that price operator and his price that week. And if it’s not carried by a competitor, we’ll reference our own regular price.”
The club specials could total 7,000 or 8,000 SKUs in any given week. They are products that are marked down and completely financed by the suppliers.
However, everyone has their own club specials, Burd explained.
“Of [the thousands of] items that are promoted weekly, there may be only about 140 or 150 that a particular family buys,” he said. “The real advantage is [having those specials] funneled into your purchase history, so it avoids a scavenger hunt through the store and organizes the offers by expiration dates.
“That means that if an item is on sale one week but a customer was going to buy it the next week and it expires this week, she has an opportunity to buy it this week at a discount. The only other way to find that price would be to walk every aisle, look at every price tag and look at every expiration date.”
One of the key advantages of this program, Burd explained, is that the company’s pricing strategy “becomes a lot more invisible” to its competitors.
“It also allows us to spend more efficiently against the impact of competitive openings,” Burd noted. “For example, we can actually [determine] who went to a new competitor’s store that opened near one of our stores and what they bought and then personalize prices to that group. When we’ve done that, we’ve gotten all of our business back, plus another $20,000 a week.”
According to Burd, the Just for U program is more relevant than a weekly ad. “We will continue to do a weekly ad, but I can envision a point in time where that’s not really very important,” he noted.
Safeway has been testing Just for U for a couple of years and has made some changes to the platform during that time, Burd said.
“To get speed-to-market we initially used a third party to help us, but that was very awkward, so we had to go back into the lab and basically develop our entire integrated platform ourselves,” he explained.
Safeway rolled out the new version of the digital platform earlier this year at its Vons stores in Southern California. In March the new version, including changes from the original platform, was introduced in the chain’s Northern California division and at Dominick’s in Chicago.
Safeway expects to have Just for U up and running chainwide by the end of June, backed by aggressive marketing, Burd said.