SAFEWAY'S PARTNERS PLEASED WITH GIFT-CARD TEST

MARK HAMSTRA

PLEASANTON, Calif. -- Retail partners of Safeway here that are offering gift-certificate cards through the company's supermarkets said they are encouraged by results from the holidays.

Safeway in October began merchandising gift cards from Nordstrom, Pier1 Imports, Wherehouse Music, Borders, Blockbuster and K-B Toys in most of its 1,500 stores in the United States.

The program was put together by a new Safeway division called Safeway Marketing Services that arranges partnership opportunities with other brands, according to sources close to the gift-card tests. Safeway could not be reached for comment on the cards or on Safeway Marketing Services.

During the holiday season, Safeway merchandised the cards above magazines at the checkout in at least some stores, but the chain recently began testing placement of the card displays on racks in other areas of its stores, including near the greeting card section and in the photo department, according to the retailers involved in the promotion.

The gift cards, which look like ATM cards, have no value until they are activated at the cash register.

"It's been a good program for us," said Brad Bait, vice president, business development, Wherehouse, Torrance, Calif. "We're happy with our volume."

He said Safeway is the only retailer that is offering the Wherehouse gift cards, which are available in $15 and $25 values.

Neither Safeway nor its retail partners would reveal the financial arrangements of the program.

"It's a business relationship that worked for all parties involved," said Ross Sawai, director, incentive and media sales, Blockbuster, Dallas. "We were very happy with the performance of the program."

Blockbuster, which offers the gift cards in values of $10 and $20, also has been offering its cards through drug store chain Walgreen, Deerfield, Ill., since July.

He said demand for the cards has declined since the holidays, as expected.

A spokeswoman for Nordstrom declined to comment on sales results, but she did say that Safeway is the only other retailer that has offered Nordstrom gift cards.