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The Financial Times reports that Safeway’s Blackhawk subsidiary will be operating “gift card malls” in all of Kroger’s more than 2,400 stores during the end-of-year holiday shopping season.

The Blackhawk business, which sells stored-value cards for retailers, restaurants, music downloads and assorted other products and services, is expected to generate about $100 million for Safeway during the current fiscal year. FT notes that while Safeway originally avoided doing business with its retail rivals, it now sells the cards through a wide range of competitive outlets, “including CVS and the US subsidiaries of Ahold and Delhaize.” And, of course, Kroger.

KC's View:
It’s awfully good of Kroger – not to mention Ahold and Delhaize - to help Safeway out like this, working to add $100 million to its bottom line. Very much in the holiday spirit.


And, of course, not only are they adding to Safeway’s revenue, but they also are selling cards that send people into the arms of other businesses that sell food, such as Taco Bell, Pizza Hut, and the like.

Sure, there are short-term dollars to be made. But at what cost to long-term market share, not to mention share of stomach?