Safeway Envisions Future Without Print Ads

No. 5 Grocery Chain Says Digital Coupons Gaining in Popularity

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Safeway is doing its best to eliminate print advertising in favor of more personalized digital ads.

The fifth largest grocery player in North America spent $20 million on newspaper ads through November of 2012. That's consistent with 2011, though a big drop off from the $33 million spent on newspaper ads in 2010.

"As people become more digital, there's an opportunity, which we're working hard at, [to] actually get out of the paper ads and make the ad itself personalized for every household," said Chairman-CEO Steve Burd during a fourth quarter earnings call with analysts.

Mr. Burd highlighted the retailer's digital Just for U Program, an online loyalty program offering digital coupons and personalized deals. The program now counts 5.4 million U.S. households, or 45% of Safeway's sales base. That number could reach 55% by year's end and ultimately max out at about 65%, Mr. Burd said. Just for U will roll out in Canada later this year. Safeway operates nearly 1,700 stores in the U.S. and Canada and reported $44.2 billion in annual sales.

"We've been surprised at the amount of digital coupons that people are accessing on the web site," said Robert Edwards, president of Safeway, noting that's been a "very positive" feature of the Just for U program.

Still, print and free-standing newspaper inserts continue to dominate coupon media, even as digital coupons gain in popularity. Kantar Media found a 46% increase in digital coupon events by consumer packaged goods companies last year, with the trend accelerating as the year progressed.

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