In Partnership with RetailWire. In a classic case of I told you so,I wrote last week about Personalization vs. Relevancy, only to have a perfect example of doing it badly pop up as a discussion on RetailWire. To set it up, I first have to relay a personal story. My family shops at Costco about once per month. During the peanut scare Costco called to inform us that wehad purchased an item that had been recalled. It was a robo-call, complete with robo-generated voice. But when I opened my pantry to pull out the item— some protein bars — I found that my husband had opened it and already taken a couple of bars. A quick call to his office, and he said he had just torn one open and was about to eat it. Whew! That kind of intervention can breed an enormous amount of loyalty, especially when it happens to you for the first time and in such a dramatic fashion. But what happens when your differentiation rapidly becomes consumer expectation? Read on to find out…  

The year of relevancy, indeed.

Each business morning on RetailWire.com, retailing execs get plugged in to the latest industry news and issues with key insights from a BrainTrust of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from the RetailWire Instant Poll.

RetailWire Discussion: Safeway Sued for Not Alerting Club Card Users to Recall

By George Anderson Editor-in-Chief, Associate Publisher, RetailWire

What follows is an excerpt from one of RetailWire’s recent online discussions featuring commentary from its BrainTrust panel of retail industry experts. Some retailers with loyalty programs have pointed to their ability to directly notify cardholders of recalls as a plus. Many, in fact, have publicized how quickly they were able to alert consumers of potential problems using the data on hand. But, in an odd twist on that benefit,Safeway is the subject of a suit for not alerting its cardholders of a recall. The suit filed in California Superior Court on Feb. 2 is being brought bya Safeway customer in Montana and another in California asking the court to make the grocery store operator pay damages for consumers not receiving a creditor refund for recalled products as well as punitive damages. The customer from Montana purchased peanut butter crackers and cookies included in a recall and the California shopper bought tainted eggs. “I assume that the foods we bring home from Safeway will be safe to eat, “ said Dee Hensley-Maclean, one of the two women bringing the suit, in a press release. “If Safeway knows that there is a problem, and they know how to get in touch with me, quite frankly I’m astonished that they wouldn’t try to spare me or my children from a preventable food borne illness. “The Center for Science in the Public Interest (CSPI), which filed the recent suit on behalf of the two Safeway customers, said it had alerted the company it might file a suit back in May if it did not start alerting card holders of recalls. CSPI argues that refusing to notify consumers they are at risk from tainted food is a violation of California’s Business and Professions Code as well as some federal statutes. “Safeway aggressively uses its club card data to churn out coupons, analyze its customers’ shopping habits, and otherwise boost sales, “saidSteve Gardner, litigation director for CSPI. “Yet when it knows it has sold products that may be contaminated with E. coli, salmonella, or other hazards, it does not use its robust marketing database to prevent illnesses or deaths. That is hardly the ‘safe way’ and just shows Safeway’s reckless disregard for the health and safety of its shoppers. “ 

Discussion Questions:

What is your reaction to the lawsuit being brought against Safeway? Do you think this action will change the way Safeway and other retailers use loyalty card data from here on in? 

RetailWire BrainTrust Comments:

Dr. Stephen Needel Managing Partner, Advanced Simulations

Without the contract in hand, it’s hard to believe Safeway has a legal obligation to notify loyalty cardholders of a recall. I don’t think a lawsuit is justified. That said, Safeway would have been smart to have been proactive, spinning it as “another way Safeway helps you. “

David Biernbaum Senior Marketing and Business Development Consultant, David Biernbaum Associates

I’m not a legal expert but I doubt that Safeway will be liable for not alerting loyalty card members about a recall. However, as a marketing expert I think Safeway ought to be doing everything possible, including to provide recall alerts, for its best customers. There are so many ways to communicate these days that there is almost no excuse.  

Warren Thayer Editor & Managing Partner, Frozen & Dairy Buyer

You read it first here, folks. If I recall correctly, in a thread of a year or two back, we discussed the possibility that this might someday happen.Not a clue if Safeway will prevail or not, but I agree with others that it would have been very wise of them to have been proactive. The little Co-op store near where I live in Vermont has been doing this for years, so it ain’t exactly rocket science.

Steve Montgomery President, b2b Solutions, LLC

One of the things we always tell clients is don’t make promises unless you intend to keep them. This includes such things as “our coffee is made fresh every 30 minutes “and would include telling people you will notify them of a recall. The negative publicity Safeway has and will continue to receive will end up costing them more than having issued the recall.

Joel Warady Principal, Joel Warady Group

A lot of people here are discussing the legal responsibilities of Safeway. Fair enough, this is a discussion about a lawsuit that was filed. But what about doing the right thing from a customer service standpoint? In today’s 2011 marketplace, where retailers are connecting with their customers using multiple platforms and technologies, wouldn’t it be both the right thing and the smart thing to be seen as the trusted partner in their customers’ food buying experience? Doesn’t Safeway have a moral obligation to inform their customers when a product that they sold might be harmful, especially if they have the customers’ information and purchasing habits? Wouldn’t this simply make Safeway more important in the customer’s daily lives? Isn’t this whereSafeway should want to be positioned? Maybe the lawsuit will be a wake-up call to execute a better consumer touchpoint strategy.

Ed Dennis President, Dennis Enterprises

I believe that if a retailer enters into a relationship with a consumer under the pretence of creating a relationship with that consumer, then the retailer has an obligation to utilize every available means of communicating bad news to that consumer. Realize that this is not a one sided relationship. The retail trade has coerced consumers into these relationships by withholding preferential pricing and other benefits unless the consumer provides personal information to the retailer. In my opinion, the retailer/any retailer has an obligation to protect its customers from any danger posed by the products the retailer sells.

Read the entire RetailWire discussion:

http://www.retailwire.com/discussions/sngl_discussion.cfm/15050Get Plugged in with RetailWire: Membership in RetailWire.com is free to all retail and related industry professionals. Simply go towww.retailwire.comand click the FREE REGISTRATION button.