SAFEWAY U.K. EXPANDS SELF-SCANNING AND LOYALTY CARDS

JAMES FALLON

GENEVA (FNS) -- In an effort to focus on a better shopping experience, Safeway, Cheshunt, England, is in the process of developing its next generation of self-scanning technology, which is expected to be live by the end of the year.

In addition, the retailer is changing the operating methods for its customer loyalty card, and is now targeting and rewarding frequent shoppers based on customer demand, satisfaction and loyalty.

Both projects will allow the retailer "to incentivize people," said Michael Winch, information technology director for Safeway. "We need to get closer to the shopping experience."

Shop & Go, the retailer's self-scanning service, is available in about 150 of Safeway's 500 stores. "We developed Shop & Go to get closer to the consumer's decision-making process in store," he said.

Safeway is rolling out the existing system to its remaining stores, as well as developing its second-generation self-scanning system. The retailer plans to begin launching the new edition in its stores over the next few months.

The existing system, which the retailer introduced about two years ago, is currently used by about 1,200 shoppers per store per week, accounting for about 20% of Safeway's annual sales of $13.44 billion, Winch said at the Global Marketing and IT Conference here last month. The conference was organized by CIES: The Food Business Forum, Paris.

"We did not install the system to cut costs, but it does," Winch said. "We installed it to improve the ease of shopping, and find it is a very important part of our customer relationship. We also find we get increased sales from people who use Shop & Go."

Self-scanning is also being tested by Safeway's competitors in the U.K.

Another method Safeway is using to get a better picture of its customers is by analyzing data collected through its loyalty card. The retailer is able to monitor detailed information about what products and incentives actually influence their customers' shopping habits.

About 80% of Safeway's customers carry the retailer's loyalty card, called ABC. Safeway's major competitors, Tesco, of Cheshunt, England, and J. Sainsbury, London, also have loyalty card programs.

Safeway is considered one of the U.K. leaders in using the customer data generated by its loyalty card, Winch said, noting that all of the company's category management and range reviews are now based on the data from its loyalty card.

"All category management decisions are made through customer data, not product sales data, and the category management directors' success is measured through customer retention and growth in loyalty," he added. "We are targeting and remunerating people through customer information. For us it's a totally different way of managing our business."