SAFEWAY-U.K. ROLLS OUT SHOPPER LOYALTY CARD

JAMES FALLON

HAYES, England (FNS) -- With today's national launch of its ABC shopper card, Safeway here becomes the second British food retailer to offer a nationwide loyalty program in a market that is growing increasingly "card-competitive."

The card launch follows that of Tesco, Cheshunt, England, which introduced a nationwide loyalty card late last year. J. Sainsbury, London, may be next to roll out a national shopper card program, said analysts, who predicted a move could come as soon as early next year.

Safeway, which is owned by Argyll Group, London, introduced a loyalty card to 144 stores about two years ago. However, the nationwide rollout completed Oct. 23 expands the program's reach to all 365 stores.

The card now has 1.3 million users but the retailer expects to boost that figure substantially. Colin Smith, chief executive of Safeway, called the ABC program the most "imaginative" one in operation. The program begins rewarding shoppers at low levels of spending and offers a variety of discounts.

Tesco's card, called Clubcard, reportedly has enabled the chain to boost market share and sales. Tesco's success has stirred speculation among analysts that most British food retailers will have to launch similar programs of their own to remain competitive.

While Tesco's program requires that shoppers spend at least $15.80 (10 pounds) before points are collected, Safeway begins rewarding shoppers who spend just $1.58 (1 pound).

Both Tesco's and Safeway's programs reward shoppers with coupons, but Safeway's ABC card

also entitles customers to free products, services and other family offers.

While Tesco sends discount coupons to customers once every quarter, Safeway will issue discount coupons on request at the checkout.

Safeway declined to reveal the investment in the nationwide program, but it reportedly is about $11.06 million (7 million pounds). A Safeway spokeswoman said the company will have to achieve a sales increase of 2% to 3% to pay for the program, a feasible goal based on preliminary trial results.

Analysts told SN the success of the Tesco card program and the introduction of a Safeway card places further pressure on Sainsbury to launch its own nationwide program.

Sainsbury, which has rolled out a loyalty card to about 200 stores, has been critical of the Tesco strategy, saying such programs are too expensive to administer and do not guarantee sales growth.

Still, industry observers expect Sainsbury to further invest in its loyalty program early next year.

Other chains, such as Co-op, Manchester, England, are also building on the trend. The retailer began testing a loyalty card in seven stores in Scotland and two in southeastern England. The card, called Dividend, operates the same way as the Tesco card.