Safeway Gets Free Mobile Payment Data, Thanks To Starbucks

When Starbucks on Wednesday (June 15) announced a new version of its mobile app for Android, tucked away in a single sentence was a line that the $41 billion Safeway grocery chain will start accepting Starbucks' mobile payment at its almost-1,000 Starbucks kiosks in July. The Safeway move, though, is the much more interesting part of the announcement in that it's a clever way for the 1,702-store chain to learn the intricacies of mobile payment without risking its core operation.

The Safeway move required a POS system upgrade to accept the very successful Starbucks mobile card, which is not really true mobile payment at all, in that the phone merely displays the barcode of the Starbucks Card.

But the changes required for the Safeway's Starbucks kiosks—which are managed by Safeway—were not done for a learning experience as much as to make it easier for people to make purchases, said Teena Massingill, Safeway's director of corporate public affairs. Still, that makes the free-on-site-training even more compelling, because it's a true fringe benefit.

Safeway can see firsthand how its customers react to mobile, the impact it has on dollars spent, how clean or glitchy the system is under real conditions and which phones Safeway customers use most often. That's valuable stuff, considering that Safeway has yet to accept any mobile payment at its front-end POS stations and is actively considering various mobile options.

There are 1,702 Safeway stores across the U.S. and Canada. These include 312 Vons stores in Southern California and Nevada, 112 Randalls and Tom Thumb stores in Texas, 37 Genuardi's stores in the Philadelphia area and 17 Carrs stores in Alaska.

Target, which was the first retailer beyond Starbucks to accept the Starbucks Card (at Target's own Starbucks kiosks), was in a very different place compared with Safeway today. Target was already well underway with its own core mobile-payment program for all locations, so the Starbucks data wouldn't have been that helpful. A cut of the profits of those cappuccinos, though? That's a very different issue.