For grocery shoppers trying to save money, a cheaper membership sounds like a dream. But a lower fee does not always mean more savings.
Safeway and Vons are replacing their FreshPass subscriptions with a $39 annual program called forU+, down from the previous $99 annual price.
At the same time, their parent company, Albertsons, has introduced a forU American Express credit card that rewards eligible online grocery purchases more generously than in-store purchases.
The changes reveal a shift in how the supermarket operator is trying to attract and retain customers: offering lower-cost delivery options and new rewards for spending while eliminating some familiar grocery discounts.
And there is a reason for the retailer to keep shoppers engaged.
During Albertsons’ Oct. 13 earnings call, interim Chief Financial Officer Cody Perdue said customers who actively use its loyalty platforms spend three to four times more than those who don’t.
Safeway, Vons replace FreshPass with $39 membership
Albertsons already operates a free loyalty program called forU, available across its supermarket banners, including Safeway, Vons, Jewel-Osco, and ACME.
The program offers personalized grocery discounts, digital coupons, and points customers can redeem for grocery and fuel savings. Eligible shoppers can also receive monthly free-item offers and birthday rewards.
Customers who want additional convenience benefits can easily subscribe to FreshPass, a paid program that combines grocery delivery with additional shopping discounts.
More Retail:
Target tackles a frustrating problem for shoppers
America’s biggest RV seller closing more stores
Costco helps members solve a key problem, but at a cost
The new forU+ subscription replaces the previous annual subscription, FreshPass.
According to Safeway’s official transition FAQ, the new forU+ subscription focuses on delivery and pickup.
It includes free same-day delivery on qualifying orders of $30 or more, $2 upgrades to Flash delivery, free Flash pickup at participating locations, and loyalty points that do not expire while the subscription is active.
Priced at $39, the annual fee is about 61% lower than FreshPass’s $99 price, but several perks are disappearing.
FreshPass annual subscribers previously received a $5 monthly grocery credit, double rewards points on Albertsons’ exclusive brands, and 5% discounts on O Organics, Open Nature, and Signature Pet Care products. All of these will be discontinued under the forU+ subscription.
A monthly Starbucks benefit and a dedicated VIP service line were also part of the parks but are also being eliminated.
Those monthly credits alone could be worth up to $60 a year for members who redeemed all 12 on eligible purchases.
That is exactly the amount of the fee reduction.
For shoppers who regularly used the credits, the old subscription’s effective annual cost could therefore be roughly the same as forU+’s $39 price, even before accounting for the other discontinued perks.
Existing annual FreshPass subscribers will keep their benefits until their current term ends, then will be automatically switched to forU+ at renewal unless they cancel. Monthly subscribers must opt into the annual plan or their memberships will end.
The change also affects eligible Supplemental Nutrition Assistance Program (SNAP) recipients.
FreshPass offered a discounted $5.99 monthly or $49 annual subscription. Although forU+ costs $10 less than this previous annual rate, the dedicated SNAP tier and monthly payment option are disappearing.
Existing annual SNAP memberships end at the end of their current term rather than automatically converting.
For someone who uses delivery regularly, the lower annual fee may be attractive. Those who mainly redeemed grocery credits or preferred monthly payments may find less value in the new replacement.
Albertsons’ FreshPass is now forU+, offering a lower price with reduced perks.MattGush / Getty Images
New American Express card offers higher rewards online
Albertsons has also introduced a separate forU American Express credit card across participating banners, including Safeway and Vons.
The card has no annual fee and offers 5% back on eligible purchases made directly through participating supermarket websites and apps, including qualifying pickup and delivery orders.
Eligible in-store grocery and pharmacy purchases earn 3% back. Cardholders can also earn 3% back on qualifying gas, dining, utilities, and streaming, and 1% on other eligible spending.
It is issued by First Electronic Bank on the American Express network and powered by Imprint. Unlike the paid forU+ subscription, it is a credit product with interest charges if balances are carried.
Under its introductory offer, users can get $50 in statement credit. However, there’s a catch.
Cardholders must make $1,000 in qualifying purchases within 90 days. And weirdly enough, purchases made at Albertsons family stores do not count toward that requirement.
Why is Albertsons changing how it rewards shoppers?
The rewards changes arrive as Albertsons struggles to improve its core grocery business.
The company reported a 0.8% decline in identical-store sales for its second fiscal quarter, while e-commerce sales rose 11%.
Digital sales accounted for 10.5% of total sales, but management said the shift toward online orders contributed to margin pressure.
The company is also confronting shoppers who are buying differently. CEO Susan Morris told analysts that lower-income customers continue trading down, seeking better value, and choosing more private-label products.
Albertsons wants to accelerate its own-brand strategy, even as forU+ eliminates extra points and discounts on several of those brands.
At its earnings call, company executives highlighted why personalized loyalty offers matter more.
Morris said shoppers can now compare grocery prices more easily, and that Albertsons wants to compete not only on price but also on convenience, selection, and offers tailored to individual customers.
The strategy comes with limits. Morris said Albertsons does not intend to become the cheapest grocer in every market. It plans targeted changes to pricing and promotions instead of broad price cuts.
Executive chair Meg Whitman is overseeing a wider turnaround that includes simplifying operations and reducing costs, with a fuller plan expected by the fourth-quarter earnings call.
Related: Discount grocery chain closing all stores as bargain grocers struggle