CINCINNATI — Kroger's decision to partner with gift card provider Blackhawk Networks, a subsidiary of competitor Safeway, demonstrates the importance of gift cards to the supermarket industry, sources told SN.
Blackhawk, Pleasanton, Calif., said late last month it is running its Gift Card Malls in Kroger's 2,491 locations in 31 states.
For Kroger's part, the program meets a consumer need, said spokeswoman Meghan Glynn. “We are seeing a growing interest in gift cards, and this agreement allows us to present a wider array of choices for our customers,” she said.
Although other Safeway competitors have signed on with Blackhawk, including Ahold USA, Quincy, Mass., Kroger is one of the largest and oldest rivals to adopt the program.
Blackhawk is expected to contribute about $100 million in earnings, Safeway reported in an October earnings call.
The partnership says more about the gift card category than it does about the two supermarket companies, said John Hauptman, partner, Willard Bishop, Barrington, Ill. “It is critically important for supermarket retailers to have a robust gift card offering.”
The deal also indicates Blackhawk's place as the major player in multi-retailer gift card programs. “It's difficult to have a strong gift card offering without using them as a supplier.”