Cutting Coupon Clutter
Approximately 70% of consumers’ final purchase decisions are made in-store, and more specifically, at the shelf, according to the Grocery Manufacturers Association, Washington, D.C. Yet, many retailers seem to be missing the mark when trying to reach these shoppers.
Too many grocery retailers still rely on traditional paper-driven vehicles, such as weekly circulars and direct mailings, to spur shopper visits. Worse, retailers are only allocating a mere 6% of their marketing budgets to in-store advertising, according to New York City-based consulting firm Deloitte.
By investing its marketing dollars in an electronic program, Marsh is getting a bigger bang for its marketing bucks.
When the grocer was acquired by a private-equity firm almost two years ago, the company underwent a business-model overhaul “that consisted of new cost-effective initiatives,” explained Chris Collier, director of marketing and customer analytics, for the Indianapolis-based chain.
“These included improving everything from product offerings, operations, administration, expenses and corporate initiatives,” he said. “The goal was to restructure our business model.”
At the same time, Marsh began operating in a more competitive landscape. Regional player Cub Foods made its way into the marketplace, and new Wal-Mart stores also began adding their own pressure.
“Our brand is known for high customer service and high-quality perishables, but to win against these competitors we needed another way to connect with our shoppers,” Collier recalled. Marsh was always dedicated to communicating with its shoppers at the point of sale (POS) through its Fresh IDEA loyalty program, “but we did a lot of list-generated direct mail and little segmentation,” he explained. “You cannot be everything to all shoppers, and creating mass-marketing promotions based on price alone doesn’t work.”
In 2001, the grocer worked with NCR, Dayton, Ohio, to create a new way to communicate with shoppers. As the beta company for NCR’s Copient solution, Marsh began segmenting shoppers and delivering targeted promotions to shoppers at POS via in-lane devices.
Marsh analyzes data and creates targeted promotions through a Web portal. Messages are downloaded to a central server and a local server distributes offers to each store. Data is updated at store level within seven minutes, and offers are available for three-week periods.
The program was successful, but soon customer behaviors began to change. “Shoppers’ lives were getting busier and we realized we needed new ways to communicate with them,” Collier said. “There is a lot of activity—and clutter—at POS. We wanted to deliver messages in a way they would have time to understand and comprehend messages.”
Rather than force shoppers to receive messages at POS, Marsh began exploring other delivery vehicles “that would allow consumers to receive, open and process digital communications at their convenience,” he said.
With NCR’s help, Marsh expanded its efforts online. The newest version of the Copient solution enables Marsh to distribute promotions and communications via e-mail, a dedicated Web site, and its newest venture, through text messages. Shoppers can still receive messages in-lane as well.
Since launching its Web- and e-mail-based promotions last spring, Collier said. “We are successfully converting online advertising to marketing opportunities. All promotions can be evaluated for follow-up and each is leading to high redemption.”
Currently, more than 40% of shoppers are clicking on and redeeming online promotions. E-mail-redemption rates vary per offer, Collier reported. “However, we are consistently getting double-digit-response rates.”
This month, the grocer is launching text message-based promotions. The program is being tested in limited markets, mostly those with a high concentration of cell-phone users. “The goal is to reach a younger demographic, especially those in more of our collegiate markets,” he said.
“The beauty of this technology is that it’s flexible and more cost-effective than traditional advertising,” Collier said. “And as new technology and devices emerge, we can continue to be receptive to communications.”
The Kroger Co., Cincinnati, is also getting in on the text-messaging game. Hoping to reach harried shoppers between the ages of 25 and 34, the grocer is teaming up with consumer-product goods (CPGs) partners to deliver promotions via text messages.
By visiting Kroger’s technology partner, Cellfire’s Web site, www.cellfire.com , users will enter their e-mail address, loyalty-card number and cell-phone number, and download and store a “shopping list” of electronic coupons on their phones. These discounts are electronically transmitted to Kroger.
Upon scanning their loyalty card during checkout, customers are authorized and all stored promotions are deducted from the order.
According to a recent Advertising Age article, Kroger will be working with CPGs, including Procter & Gamble, Clorox, Del Monte, General Mills and Kimberly-Clark.
At presstime, Kroger was developing the program with its partners. A company spokeswoman declined to confirm when the program will debut.
OfficeMax 1Q sales fall on weak economy
NAPERVILLE, Ill. OfficeMax announced that for its first quarter ended March 29, total sales decreased 5.5% to $2.3 billion compared to the first quarter of 2007. Net income increased in the first quarter of 2008 to $63.3 million, or 81 cents per diluted share, from $58.5 million, or 76 cents per diluted share, in the first quarter of 2007.
OfficeMax Retail segment sales decreased 5.5% to $1.11 billion in the first quarter of 2008 compared to the first quarter of 2007, reflecting a same-store sales decrease of 8.7% partially offset by sales from new stores. Retail same-store sales for the first quarter of 2008 declined across all major product categories due to weaker U.S. consumer and small business spending and the negative impact of the Easter holiday occurring in the first quarter of 2008.
IKEA to open first U.S. manufacturing facility
DANVILLE, Va. IKEA, through its subsidiary Swedwood, announced that it will open its first U.S. furniture manufacturing facility on May 21 in Danville, Va. The 930,000 square-foot Swedwood factory will produce a variety of wood-based IKEA products, the company reported.
“We made excellent progress on construction last year and our installation of equipment and machinery has gone very smoothly,” said Bengt Danielsson, North American president of Swedwood. “Now our primary objective is to complete appropriate operational training for 175 coworkers as well as to ensure a seamless production and packaging process.”