Safeway Inc.’s Safeway.com and Vons.com online grocery services are steadily expanding by taking slow, deliberate steps in contrast to the aggressive strategies that sank earlier online grocers.
Within a year, Safeway’s online grocery business has grown to 320 communities in Washington, Oregon and California markets where Safeway already had a presence with its Safeway and Vons supermarket chains. “They’re doing a pretty good job of it,” says David Kathman, a retail stock analyst with Morningstar Inc. in Chicago. “If anybody is going to make online grocery work, it has to be a traditional grocer with plenty of infrastructure already in place like Safeway.”
Safeway has held off on its online strategy until the market proved itself. And it uses a system operator, GroceryWorks, that leverages some of the online know-how it has gained through a strategic relationship with the online grocery business of Tesco PLC, the UK’s largest grocery company. GroceryWorks is owned 50% by Safeway, 35% by Tesco.
Dave Stewart, vice president of marketing for GroceryWorks, says its strategy is to take the time to test and implement improvements both to its web sites and its in-store fulfillment policies. For example, GroceryWorks fulfills orders from existing stores by professional “pickers” who read web orders from a wireless screen attached to their carts and networked to corporate computers. The system is designed to tell pickers not only exactly what customers want, such as how ripe they want their tomatoes, but also the fastest route within the store to shop.
Several improvements are in the works for the web sites, Stewart says. “We have an incremental approach that allows us to perform regularly scheduled releases that have addressed everything from add-to-basket functional improvements to the release of a text-only site for the visually impaired,” he says. He adds that Safeway.com and Vons.com are also being upgraded with additional product images and more information on nutrition and product ingredients.
GroceryWorks also is implementing systems designed to help online shoppers organize their routine shopping needs. For example, Safeway.com and Vons.com each provide a “Real-Time My Favorites” feature that enables loyalty card users to see a list of the 300 items that they have most often purchased online as well as in stores.
“We realize that the Internet provides several advantages that a brick-and-mortar store cannot,” Stewart says.
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