Safeway Inc. launched a "Safeway Savings Club" card this week at its 12 supermarkets in the Baltimore area. When used at the checkout lanes, the card electronically gives customers discounts of 10 percent to 20 percent on an ever-changing group of store specials.
Safeway is touting the buyer service as a way to avoid time-consuming coupon-clipping, but the card also helps the state's second-largest supermarket chain identify an individual's shopping patterns for future manufacturer promotions.
"This kind of service gives retailers more power over manufacturers, and it's based on the power of the consumer," said Diane Crispell, national editor of American Demographics, a magazine focusing on consumer trends and their implications for businesses.
To get a Savings Club card, a customer fills out an application with optional questions on the number of people in the household, number of dependents living at home and their ages, annual household income and amount of money spent on groceries each week at Safeway.
The questionnaire also asks how much money is spent by a customer at Giant, Safeway's most formidable competitor in the region and the largest supermarket chain in Maryland.
At the checkout counter, Savings Club members will have their club cards scanned with every purchase and receive instant electronic discounts on any of the store's specials for the week. The items with discounts for club members only will be identified by signs in the store. If the member has a manufacturer's coupon for a store special item, it too will be honored, increasing the discount.
As the club card is scanned, a list of the club members' purchases also will be recorded. Safeway could sell that information to manufacturers, who could then tailor coupons to a specific club member. Such a promotion would be mailed to the member via Safeway, not directly from the manufacturer, Safeway spokesman Jim Roberts said.
"If we find that someone is a popcorn lover, we will send them manufacturer's coupons for popcorn. If someone has a zillion kids at home, maybe we'll send them a coupon for diapers," Mr. Roberts said.
Being able to provide information on which customers are buying TC what can give Safeway a huge bargaining chip with manufacturers. Knowing shopping trends helps manufacturers more accurately assess the amount of attention they should spend on promotions at a particular store.
Also, if shoppers aren't buying a particular item, a coupon could stir interest.
Being able to mail shoppers manufacturer's coupons for Safeway brings customers back to the store and builds store loyalty, Mr. Roberts said.
Customers can choose whether to be on mailing list for promotions and giveaways.
The practice of electronically tracking what a customer is buying is burgeoning among retailers, but industry experts say only large chains are adopting it now because the costs of setting up such a program can be high.
Safeway, based in Oakland, Calif., said it invested $10 million in International Business Machines Corp. equipment to start the program in the Baltimore area. There are is also a wide array of costs involved with gathering and using the data and tailoring programs to the information found, experts say.
The Safeway program is expected to expand to 150 stores in Washington and Richmond, Va., by the end of 1992.
As Giant Food found out two years ago, if a frequent-buyer program isn't user-friendly, it can be a flop. Giant tested a "credit card" frequent-buyer promotion in Waldorf and four Virginia stores for a year. Customers were mailed rebates, redeemable as either cash or merchandise after they met certain purchase requirements for specific products.
That differs from the instant gratification of immediate discounts that the Safeway card offers.
Giant said it would expand the program to other stores, but has since canceled the program.