SAFEWAY EXPANDS GIFT CARD SUBSIDIARY

DAN ALAIMO

PLEASANTON, Calif. - Safeway, through its Blackhawk Network subsidiary, is expanding rapidly in prepaid gift cards in its own stores, as well as other chains across the country.

Blackhawk was established by Safeway in 2001 as a prepaid card and payment network, said Teri Llach, Blackhawk's group vice president. Both companies are based here, although in different facilities.

Each year, the company has expanded the business while testing different merchandising approaches. The company now has 45,000 storefronts of about 100 chains, with 60,000 storefronts of about 125 chains expected by the end of the year, Llach said. It operates in the United States and Canada. Future expansion includes the United Kingdom, where Blackhawk has just established an office, she said.

It is known that Giant Eagle, Pittsburgh, is one of Blackhawk's customers, but Llach would not reveal the names of others. "We have targeted the top retailers in each of their markets," she said. These include other grocery chains, as well as convenience, drug and specialty stores, she said.

Blackhawk has about 100 card partners representing a wide variety of retailers, restaurants, entertainment venues, phone and other services, and "everywhere-use cards" such as MasterCard, Visa and American Express, she said.

Having Safeway as a parent company has not met with resistance from other chains, Llach claimed, and has proved to be a positive. "The fact that we are a retailer ourselves, we speak the language," she said.

"As a retailer as well as a provider of these prepaid cards, we are able to test our way into everything. We can find out in real-world situations what cards work, what cards don't work; what promotions work, what promotions don't work. Since we are a retailer, as well as a leader in these third-party gift cards, we're able to effectively deliver something to the market that works better for the consumer," Llach said.

Citing some prominent names of merchant and restaurant gift cards provided by Blackhawk, Llach mentioned Best Buy, Barnes & Noble, Footlocker, Chili's, iTunes and many others. Store-branded cards of host retailers are sometimes handled separately, she said.