NEW YORK — Safeway will package $150 million in real healthcare savings into an overall wellness strategy to be implemented over the course of 2013, the grocer's chairman and CEO Steve Burd told analysts Thursday morning at the Goldman Sachs 19th Annual Global Retailing Conference.
Those $150 million in healthcare savings was realized by Safeway over the course or the past seven years. "We've contained our healthcare costs across an organization of 175,000 people. We have a lower healthcare cost in this company today than we did in 2005," Burd said. "[In] 2005, we spent about $1 billion; last year we spent about $850 million in healthcare. So we have [come up with] a way of 'productizing' the things that we've learned and providing products and services to our consumers."
Safeway's wellness play has been in development for more than two years now, Burd said. "We are working with a partner who has innovative technology, so it's not just us," he said. Safeway will pilot its wellness platform in one market in the fourth quarter and expects full rollout by the end of 2013. "When completed, the initiative is expected to deliver not only some strong IDs, but also a good margin and good income. And it should attract more people to our stores."
Safeway's wellness strategy was one leg of three core sales-driving pillars outlined by Burd, the other two being Safeway's Just for U loyalty program and its fuel loyalty program.
Just for U is a digital marketing platform that delivers personalized offerings to the 4.1 million shoppers who have registered for the platform, or presently, 23% of Safeway's regular shoppers. "We have the best repurchase rate of any program in the retail business," Burd said, "because it's very targeted to the shopper's history." The program has expanded nationwide in the past few months, and Just for U shoppers are already accounting for 36% of Safeway sales. "We believe by the end of this year, 45% of our sales will be represented by registered Just for U applicants," Burd said.
Of the 4.1 million Just for U registrants, some 1.4 million are not active users, representing a "huge opportunity" for Safeway to connect with those shoppers and pull them into their stores, Burd said.