During their investor call last Thursday, Safeway announced that their profits had dropped in the 2nd quarter of 2012. They said that advertising and the newly launched Just 4 U rewards program were to blame for the sudden decline. The company is optimistic though that the customer loyalty program will increase profits for Safeway in the long-run. CEO Steve Burd even estimated that 35% of Safeway’s business will come from customers using the loyalty program.
We certainly hope that Safeway doesn’t have all of its eggs in the proverbial basket when it comes to this loyalty program. While we think anything that builds customer loyalty is great, nothing can replace the face-to-face interaction that we provide on the shop floor. Customers come back to stores not only because of great prices but because of the superior customer service that we provide every day. They enjoy being able to have a particular meatcutter assist them with that steak cut just so. They even prefer to have the same cashier ring them up each time they shop.
We’re curious to know what impact Safeway’s aggressive approach that they’ve been taking with UFCW Locals all over the country have had on their bottom line. Perhaps if they were more willing to bargain in good faith from the start of each negotiation, they wouldn’t find themselves in a situation where they have to bolster the identity of the company so much. We think reputations are not only built on the shop floor but at the top of the company as well. Customers still talk about how negatively the company behaved during our negotiations and we know that’s not a legacy that Safeway wants to be remembered in the community.
Let’s hope our negotiations in 2013 will be much smoother and that the company comes to the table willing to bargain in good faith from the start. That’s the way you build a positive image and we’re more than happy to help you continue to do that.