Cooking Up e-Payment Convenience
Consumers are demanding convenience more than ever before, especially when it comes to managing the many prepaid payment cards in their wallets. Uno Chicago Grill is helping its customers change how its visitors regard gift cards with a new virtual option.
Gift cards, which weren’t even close to acquiring critical mass a mere seven years ago, have clearly emerged as a bustling industry. The store-based cards were expected to generate $61 billion in sales in fourth quarter 2008, according to New York City-based analyst firm The Tower Group.
However, they do present challenges. Lost cards are irreplaceable by retailers, forcing consumers to manage the cards’ safety and revolving balances. Meanwhile, retailers struggle with the age-old problem of how to merchandise the cards within a finite amount of selling space.
The biggest challenge emerged during the 2008 holiday shopping season, as many consumers traded potential gift-card spending for the deep discounts that retailers offered on “actual” merchandise. In mid-December, for example, fewer than 25% of shoppers had purchased gift cards, a decline from more than 30% of purchases made during the same time frame a year earlier, according to the National Retail Federation, Washington, D.C.
These factors really hit home for the executive team at Uno’s and pushed the company to consider new alternatives. “As people retrench their priorities during the recession, they are watching discretionary spending,” said Rick Hendrie, senior VP marketing for the Boston-based chain. “Consumers are working harder and longer these days. While some eliminate eating out to save money, other hard-working consumers consider a restaurant visit a treat. We want to make payments more convenient for them.”
Uno’s offers prepaid gift cards that can be purchased at each location or online, at Unos.com . But the pizza chain upped the ante on gift-card sales with a new card option—a virtual one.
Using a software-as-a-service hosted application from Cash Star, South Portland, Maine, Uno’s now has a dedicated Web page where shoppers can purchase the electronic gift cards. Here, shoppers are prompted to add a dollar amount from $20 to $100 and design their card with images ranging from Uno’s dishes or celebratory messages for “Mom,” “Dad” or “Grads.” They can also personalize cards by uploading their own images and personal messages.
After inputting a recipient’s e-mail, the consumer completes payment with a major credit card and billing information. E-cards are sent via e-mail.
A link in the message directs recipients to a secure Web page where they are instructed to print out the “card.” It is presented while settling their dining bill and processed the same as a plastic gift card. Unused balances are stored in Uno’s database, and can be saved for a future visit.
Uno’s added the solution a mere two weeks before the end of the 2008 holiday shopping season, at a time when most companies shy away from testing new technology.
“We felt there was no reason to wait,” Hendrie said. “Our company is used to taking risks, and as we watched gift-card sales slipping across the industry, we were looking for an edge.”
While standard plastic-gift-card purchases still account for “a bulk of our prepaid-card sales,” he said, “the technology bodes well for the future.”
At presstime, Hendrie was in the early stages of rolling out a dashboard that will track gift-card sales and related metrics. It also provides reports that will help the chain pursue targeted marketing initiatives. One item on Hendrie’s agenda is to segment sales and push robust e-mail-based promotions to card purchasers and recipients.
“We were pleased with our early test results during the holiday season, and we just completed our next round of promotions surrounding Mother’s Day, Father’s Day and graduation,” he said. “We will analyze the results of each holiday and better prepare ourselves to market the virtual cards for the upcoming holiday season.”
OfficeMax Q1 profit drops 79%
Naperville, Ill. OfficeMax announced its first quarter 2009 results on Thursday, which included a steep profit decline of 79%, from $62.4 million in first quarter 2008 to $13.1 million in first quarter 2009.
Total sales decreased 17% in the first quarter to $1.9 billion, compared with first quarter 2008.
“Although our financial results declined in the first quarter vs. the prior-year period, we continued to make improvements to our business and to contain costs,” Sam Duncan, chairman and CEO of OfficeMax, said. “We improved retail segment operating expenses as a percentage of sales compared to the first quarter of 2008 as a result of reorganizing our management, more efficient execution, and tighter cost controls.”
OfficeMax’s same-store sales decreased 12.7%, and sales declined across all major product categories primarily due to weaker small-business and consumer spending.
OfficeMax ended first quarter 2009 with a total of 1,020 retail stores, consisting of 939 retail stores in the United States and 81 retail stores in Mexico. During first quarter 2009, OfficeMax opened six retail stores in the United States and closed two stores in Mexico and six in the United States.
For the full year 2009, OfficeMax said it expects to open as many as 12 retail stores, and shutter between 15 and 25 retail stores.
Big Lots tries something new in Columbus
COLUMBUS, Ohio Big Lots has moved in a different direction with the opening of a store in an affluent area of Columbus, Ohio.
Dow Jones reported that the store now occupying a former Linens ‘N Things offers similar merchandise to othe Big Lots stores, but is differentiated by better in-store presentations and wider aisles.
“We’re offering a higher standard of presentation here,” said Tim Johnson, VP strategic planning, in an interview with Dow Jones. “We understand that this is a different type of customer that wants to be communicated with differently.”
According to Dow Jones, Big Lots is looking to change its image as a bargain-basement, rummage-sale store, to something a little more sophisticated.