Raley's, arguably facing the stiffest competition in its 77-year history, is launching the company's first-ever customer loyalty and rewards program today.
Called Something Extra, it's rolling out in each of the West Sacramento company's 120 Raley's, Bel Air and Nob Hill Foods stores. The centerpiece is a brightly colored customer card around which numerous perks revolve.
Raley's touts the program as more tailored to individual shopper habits than a traditional price-discount card like those offered by rival grocers.
"This represents a paradigm shift that has occurred in our own thinking," said Mike Teel, president and CEO. "In the past, much of what we did was based on what the manufacturers wanted. From this day forward, we're going to be customer-driven, doing what they want."
While today marks the official launch, Raley's has been actively seeking Something Extra sign-ups in earnest since Sept. 12. By noon Tuesday, 70,350 shoppers had registered.
David Palmer, Raley's vice president of marketing and consumer relationships, said Something Extra was developed over three years in partnership with dunnhumbyUSA, a joint venture of the Kroger Co. and London-based retail/branding data company dunnhumby.
Since 2003, dunnhumbyUSA has managed Kroger's loyalty program, which includes programs for its Ralphs, Food4Less and Foods Co. stores in California. Raley's officials said Something Extra is similar to other programs offered in the United States, but is the only one of its kind on the West Coast.
Palmer stressed that Something Extra "is not a two-tier pricing program, where there's a lower price for club members and a higher price paid by nonmembers."
He said in-store prices and specials are universal for Something Extra members and nonmembers, but program enrollees get extra benefits.
"We want to reward the customer for who you are, what you buy and what you care about," Palmer said.
Basically, the program awards one point for every $1 spent on eligible products. Extra points can be earned for buying certain items and participating in various promotions. Points transfer to quarterly reward vouchers that can be used toward savings on future purchases.
Beyond that, it gets a little more analytical, incorporating data analysis, vendor partnerships, customer communications and, ultimately, more-personalized offers.
"By learning from our customers' shopping preferences, Something Extra will deliver customized offers on the products they purchase most, which will make their shopping experience easier and more satisfying," Teel said. "As our customers continue to engage in Something Extra, we will evolve and grow the program to respond to their needs."
Something Extra is being rolled out at a time when Raley's faces brutal competition on multiple fronts.
It has closed some stores and is seeking concessions from unionized workers, saying it needs lower labor costs to compete with nonunion stores such as Wal-Mart, Target and Fresh & Easy that have lower overhead.
Just last week, Wal-Mart launched a major offensive in the region, simultaneously opening five new Neighborhood Market stores in the Central Valley, three of them in the Sacramento area.
Wal-Mart touts Neighborhood Market as its small-footprint, quick, convenient, discount-priced grocery operation. The average size is around 40,000 square feet. A typical Raley's store is larger, around 55,000 square feet.
Analysts said the addition of the loyalty card could boost Raley's, which has seen its market share slide in recent years. The question is: how much?
"It seems like a good move, but maybe a little late," said Raymond Flores, a Los Angeles-based retail/ branding consultant. "At the end of the day that (new program) is not going to make Wal-Mart or the discount (grocery chains) go away."
New York-based marketing and branding expert Peter Schaub called Something Extra "a pretty smart move, actually. Anything that drives shoppers to your brand and builds loyalty in a given market is good.
"Now, the trick is to see how many shoppers they can lure away from other stores."