SUPPLY CHAIN

Tasting Success

BY Mike Zahler

During the 2006 holiday season, Five Rivers Wines, an emerging California winery, was looking for ways to drive both sales and awareness of its brand.

“We were searching for a program that would engage consumers more than a traditional in-store promotion,” said John Tichenor, group brand manager, Five Rivers Wines, Paso Robles, Calif.

The winery found a perfect solution in Dropcards, an electronic promotional vehicle that allows a brand to give away rewards at a low distribution cost. Dropcards are plastic cards that bear a unique PIN number, and allow the redeemer to access exclusive content and online services, such as music downloads, movie tickets, coupons and ringtones.

Available in a variety of shapes, sizes and styles, the cards can be integrated into product packaging or distributed separately in-store or at selected events. They are packaged around Five Rivers Wine bottle necks.

“Dropcards provide something of value that our consumer definitely uses,” said Tichenor.

Equally important, he added, the promotion was consistent with the lifestyle of its typical customer: trendy 25-to-30-year-old females.

The methodology behind a Drop-card promotion is simple: Customers access the customized Dropcard Web site and input the PIN number found on the back of their card, which activates a reward.

“Essentially, all the consumer needs [to activate rewards] is a PIN number,” explained Bill Grassmyer, founder and CEO, Dropcards, Parsippany, N.J. “The product allows retailers to do a really compelling promotion at a really low cost.”

Typical rewards include downloadable music. But they can be anything a vendor desires—from movies to a sweepstakes entry. Five Rivers Winery used eMusic, a digital-download company that features independent artists, to reward its customers.

If the client desires, the reward redemption can come with one string attached: The redeemer must participate in a short survey before receiving the reward. The winery, for example, required respondents to answer questions about age, gender, purchase occasion, and past and current purchases.

Dropcards provided Five Rivers Winery with a complete, turnkey solution.

“Dropcards did it all for us, from designing the Web site, to managing consumer research, to printing the actual cards,” Tichenor said. “And everything was branded with the Five Rivers brand.”

Dropcards helped Five River Wines “stand out when we were selling to our retail partners,” Tichenor added. Those same chains stand to benefit from the promotion as much as the brand itself. The cards help boost the visibility—and potential sales—of the product, and also allow the retailer to be associated with a fun campaign. Safeway, Kroger and Harris Teeter are just few of the supermarkets that participated in the Five Rivers Wines promotion.

Five Rivers Winery was extremely pleased with the results of its Dropcards promotion. So much so that the winery plans to do another one with retailers for the 2007 holiday season.

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Sears Holdings ceo unhappy with 2Q

BY CSA STAFF

HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $176 million, or $1.17 per diluted share, for the second quarter ended Aug. 4, compared with net income of $294 million, or $1.88 per diluted share, for the second quarter ended July 29, 2006. The company attributed the decline in its second quarter results from the same quarter last year to lower operating results at both Sears Domestic and Kmart, which were partially offset by improved operating results at Sears Canada.

“We are disappointed with our second quarter results. Our gross margins came under pressure from sales declines and increased promotional activity, and as a result, our net income was significantly below last year and our expectations,” said Aylwin Lewis, Sears Holdings’ ceo and president.

Sears Domestic’s comparable-store sales declined 4.3% for the quarter, while Kmart’s comparable-store sales declined 3.8%. Total domestic comparable-store sales declined 4.1%. The company reported lower sales across most merchandise categories at both Kmart and Sears Domestic, partially offset by increased sales of women’s apparel at both Kmart and Sears Domestic, as well as within consumer electronics and footwear at Sears Domestic. For the quarter, total revenues declined $0.6 billion to $12.2 billion in fiscal 2007, as compared to $12.8 billion for the second quarter of fiscal 2006.

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Lane Bryant pres. joins Christopher & Banks

BY CSA STAFF

MINNEAPOLIS Former Lane Bryant president Lorna Nagler will join Christopher & Banks as president and ceo effective Aug. 31. She will replace Matthew Dillon, who resigned from his position as president and ceo and as a member of the board of directors today. Nagler has also been elected as a member of Christopher & Banks’ board of directors effective Aug. 31.

Nagler most recently served as president of Lane Bryant, a division of Charming Shoppes. Before joining Charming Shoppes in April, 2002, Nagler served as a senior vp and general merchandising manager for apparel and jewelry at Kmart Corp.

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