There are changes on the horizon for Safeway, as details of its planned sale to Albertsons are finalized. One of those changes just might be the phaseout of the Club Card loyalty program. Company executives aren’t confirming or denying the possibility, but it’s not so far-fetched, because it’s already happened in some 200 Safeway stores – in Canada.
California-based Safeway sold its Canadian division to the Sobey’s supermarket chain last year (and then sold off its Dominick’s stores in Chicago, partly to help pay the tax bill for the transaction). Sobey’s does not have a discount-based loyalty program. And now, neither do its newly-acquired Safeway stores.
“We wanted to make it even easier to save at Safeway,” a company announcement reads. “Now everybody gets our lowest price, every day.”
Safeway introduced its Club Card loyalty program, in both the U.S. and Canada, back in 1998. “This is a way we feel we will be able to provide better discounts than our competitors,” spokesman Greg TenEyck said at the time. It was also a way, of course, to collect data about customers’ preferences and purchase history.
So why would the new owners of the Canadian stores want to do away with the cards, and all the data associated with them? “Loyalty programs cost money,” Simon Fraser University marketing professor Lindsay Meredith told Canada’s Global News. “So if you’re looking to save bucks on the bottom line, dump the program.”
In the U.S., the owners of Albertsons have a history of doing away with existing loyalty programs as well. That’s given rise to speculation that once it completes the acquisition of the U.S.-based Safeway stores, it will also do away with Safeway’s Club Card, and the Just for U loyalty program. When asked about the possibility last month, Safeway CEO Robert Edwards would say only that “no decisions” had been made.
Many Safeway shoppers will happily give up their Club Card. “Glad to see that at least one grocery store is doing away with all the costly ‘money saving’ gimmicks,” one commenter wrote on Safeway Canada’s Facebook page. “About time, I hate having to carry a card around or let everyone in line know my phone number,” wrote another.
Others aren’t so sure. “I can’t see how losing the Club Card is at all a good thing,” another commenter wrote. “I get that they will still have sales, but I doubt the sales will be as good as they would have been if you needed a ‘card’ to get it.” And not having a card to swipe at Safeway gas stations means fuel rewards will now print at the bottom of grocery receipts, which must be turned in to get the discount. “I am not carrying my receipt,” one commenter grumbled. “That is worse than the actual card.”
In theory, not having the card will mean lower prices for everyone. And that’s exactly what Safeway is promising. Not only does doing away with the loyalty program mean “one less card to carry in your wallet,” Safeway Canada Public Affairs Manager Mary D’Astolfo told Coupons in the News, but “we’ve introduced 1,500 additional sale prices.”
That move could be good for both Safeway and its customers, because many analysts say Safeway has a price problem – both in the U.S. and Canada. “I think Safeway really has to drop their prices now,” Alberta School of Business marketing professor Kyle Murray told the Edmonton Journal. “They used the card to give some people lower prices. Now they’re going to have to reduce prices across the board, because without the Club Card prices they really aren’t competitive.”
Of course, there’s always the concern that those low prices won’t last. If “you save the money on the loyalty program and you pass that through in reduced competitive prices, then the consumers win,” Meredith said. “If, on the other hand, you’re having a little problem with your share price or your bottom line, maybe you take the savings you made from collapsing your loyalty program and you stuff that in your back pocket. Translated: consumers don’t win.”
So could Safeway’s U.S. stores follow suit and ditch the card? The American and Canadian divisions are completely separate companies now, so what one does doesn’t really affect the other. But the circumstances are certainly similar: Safeway sells to a competitor that doesn’t do loyalty programs, and the new owners have to decide whether to embrace their newly-acquired loyalty program, or eliminate it. We’ve now seen what the owners of Safeway Canada have done. Only time will tell whether the new owners of Safeway U.S. will follow.
