Frequent Flyer Miles on Aisle Three – Get ‘Em Before They’re Gone

Miles for groceries? Yes, but not many. And not for much longer.

Supermarkets operate with such thin profit margins that they can’t afford to spend much on marketing incentives. But alone among major chains, Safeway and its family of national and regional brands (including Vons, Dominicks, Pavilions, Randalls, Tom Thumb, and Genuardi’s) has been a player in the loyalty space for some time, offering 125 miles for every $250 spent in the programs of Alaska Airlines, American, Continental, and United.

While Safeway boasts more than 1,500 stores in the U.S., the scope of its participation with its various airline partners varies widely. Members of American’s program can only earn miles for shopping at Randalls stores in Austin, Texas. United Mileage Plus members, on the other hand, earn miles for shopping at Dominicks, Genuardi’s, Pavilions, Randalls, Safeway, and Vons.

At a half mile per dollar spent, this has always been one of the least lucrative mileage-earning opportunities available to airline program members. Still, because groceries are purchased regularly and often by many families, it at least represented a reliable source of miles, if not a rich one.

Generous or not, the days of grocery miles are numbered. Safeway has apparently made a corporate-wide decision to end its participation in airline programs on the last day of February.

As this blog entry was posted, I still hadn’t received a response from Safeway to my request for information about the reversal. But it’s a pretty safe assumption that the company’s marketing team decided that more could be saved by withholding miles than could be earned by awarding them. We are in a slow economy, after all, and discounts resonate more than bonuses when budgets are tight. Plus, since none of Safeway’s competitors is offering airline miles, there’s no pressure to respond in kind.

For several years, I’ve been warning the airlines that their program partners would begin abandoning mileage schemes if the transparency and availability of awards were not improved. Is this the beginning of that trend away from frequent flyer marketing? I think not. Rather this simply reflects the cost-benefit scenario for one particular industry, groceries, that has traditionally relied on discounting and couponing to keep its customers coming back. Safeway is returning to its roots.

Frequent flyers, meanwhile, can continue earning miles for their groceries by using a program-linked credit card to charge their purchases. Maybe the lower prices will compensate them for returning home with somewhat fewer frequent flyer miles.