Albertson's Takes a Risk by Dumping Lucky Club Card.

In the marriage between supermarket giants Lucky and Albertson's, more was lost than just a store name.

Gone is the little plastic Lucky Rewards card that entitled shoppers to two-for-one bargains and discounts on everything from bananas to bagels.

Albertson's has decided instead to push its Bonus Buy program, which offers straight discounts to all customers without the hassle of locating that piece of plastic that dangles from key chains or is tucked inside wallets.

"Albertson's believes that every customer who comes to the store is entitled to low prices," said Judie Decker, an Albertson's spokeswoman.

As Albertson's and Ralphs duke it out to be No. 1 in the Southern California market, analysts are watching to see whether chucking the club card affects customer loyalty.

"This is the perfect way for Albertson's to differentiate its product," said Jonathan Ziegler, an analyst with Deutsche Bank Securities in San Francisco. "For everybody who likes a card, there is somebody who doesn't like one."

That was evident by talking to customers getting used to the demise of Lucky, which officially took place on Nov. 3.

Sylvia Obrowski recently stood outside a newly converted Albertson's store and checked her grocery receipt to see how much money she had saved under the Bonus Buy program. "Actually, they have a lot of discounts. I think it's about the same as before, when Lucky was here," she said.

But another customer wasn't as pleased. "I liked it better the way it was. I'll probably go to Ralphs," she said.

Albertson's, based in Boise, Idaho, has never been enamored with the club-card concept. "Albertson's likes to keep everything streamlined and simplified," said analyst Burt Flickinger III of Reach Marketing. "But the Lucky Rewards card was very popular in Northern and Southern California."

That could spell good news for Albertson's two major competitors, Ralphs and Vons, which are betting that consumers have become addicted to the club cards that began popping up more than 10 years ago. Both chains have started aggressively advertising their club-card bargains.

Ralphs recently filled mailboxes with advertisements showing what customers can get with their Ralphs Club card. There was everything from tuna fish (two cans for $1.09) to a pound of Alaskan halibut steak for $6.99. One mailer also contained a $5-off coupon for any purchase over $50 using the club card.

Vons touted its club card, which has been around since 1988, in a recent newspaper ad. "The first card is still the best card," the ad said. Vons Club cardholders could get a whole chicken for 49 cents a pound and an 8-pack of Duracell batteries for $3.99.

Albertson' s countered on the day of the merger with ads for straight discounts on chicken breasts ($1.79 a pound), red delicious apples (three pounds for 99 cents) and four cans of Bumble Bee tuna for $5 -- all to be purchased without a club card.

The $12 billion merger between Lucky and Albertson's transferred 480 Lucky stores in California into the Albertson's chain, giving it 281 stores in Southern California. Ralphs has about 300, and Vons has 260.

Club cards were once seen as a highly effective marketing tool, but some say they have started losing a bit of their luster.

"The card programs originally had sizzle and people thought they were getting something for nothing," said Len Lewis, editor in chief of the Progressive Grocer, a trade publication. "But they are rapidly reaching a point where stores will have to look at a second generation of club cards with value-added services. Those services could be collecting points that are redeemable with other retailers or good for air miles with an airline company."

Though club cards are popular all over the U.S., they are particularly well liked in Southern California, where nearly 70 percent of supermarket customers use them, according to Flickinger. That compares to 45 percent of U.S. customers.

Groceries like club cards because they keep consumers returning to the same chain. They also keep track of sales in an industry in which 30 percent of customers account for about 75 percent of the business, said Bill Bishop, a supermarket consultant with Bishop Consulting in Barrington, Ill.

"On the one hand, the card gives you tremendous insight into your customers and your ability to understand and target those customers," Bishop said. "The disadvantage is, the systems are expensive."

Many chains don't have the computer expertise to use the data they are collecting, analysts said. And they have been wary about giving or selling this information to third parties.

Gov. Gray Davis last month signed the Supermarket Club Card Disclosure Act of 1999, which takes effect July 1, 2000. It prohibits a club-card issuer from selling or sharing personal identification information regarding card holders.

But that doesn't mean the club card is threatened. It's probably here to stay, analysts say, whether Albertson's likes it or not.