NEW YORK — Besides viewing its “Just for U” digital platform as a marketing tool to drive more sales from existing customers, Safeway also has benefited from using it as a defensive tool to win back customers from competitors, Steve Burd, chairman, president and chief executive officer, told the Goldman Sachs Global Retailing Conference here last week.
“Just for U” is an online program offering consumers personalized pricing based on their shopping history,
To illustrate his point, Burd cited a competitor with a strong perishables offering who opened a store a block from one of Safeway's high-volume locations and took 7% to 8% of Safeway's volume.
Of the Safeway store's 30,000 customers, Burd said, 7,000 accounted for 90% of the demand decline at the store, including 2,000 who were “Just for U” customers — a number that would have been much higher, he added, “if we were marketing this vehicle hard, which we are not.
“Then we did a mailing [stressing ‘Just for U’] to the balance of the 5,000, and in 10 days we cut our loss to the new competitor by 70%.
“So while ‘Just for U’ is designed as a vehicle to go after people who are occasional shoppers — to embed more loyalty in those that are already loyal — it is also a remarkable tool for bringing back business because it not only has sales-building potential but it also really softens the gross margin effects for all 30,000 customers, 23,000 of whom had no intention of going to the competitor.
“So that's the value of the digital platform, and when you marry that with the mobile capability we will be adding, I think you have something very powerful.”
Safeway is testing “Just for U” in Chicago, Northern California and Hawaii, “and with little or no marketing, we have seen significant improvement in ID sales,” Burd said, “and we are pretty optimistic about its ability to take share on a targeted basis across all our geographies.”
Burd said Safeway created the digital platform in partnership with just seven or eight vendors, “but the expectation is that will build over time, and we have a lot of the vendor community interested in deploying that platform.”