What’s good for the goose is good for the gander.
After watching for years as in-store marketing helped drive sales, retain customers, and fuel repeat purchases in supermarkets, players in other retail channels are starting to get in on the action.
Who can blame them? In-store marketing is effective and efficient, giving brands access to shoppers at the most important point of impact: right before they open their wallets. Spending on in-store marketing systems rose 8.7 percent to $870 million in 1999, according to promo estimates. (That’s not even counting spending on P-O-P displays, which accounted for $14.4 billion in expenditures last year.)
The eyes of the industry shifted West last year when Phoenix-based Petsmart struck a deal with Catalina Marketing to bring the St. Petersburg, FL-based in-store company’s flagship coupon system into its 500 stores. A chain-wide launch of the system is scheduled for later this summer, after months of testing in half of Petsmart’s stores (and even more months of system upgrades).
“Our store is our best promotional tool,” says Ken Banks, Petsmart’s senior vp-marketing. “And the whole shopping experience is about more than just buying merchandise.”
The effort is set to launch with the rollout of Petsmart’s first loyalty card program, and will offer both targeted coupons at the point-of-purchase and rewards based on buying behavior. The as-yet-unnamed program will also help Petsmart leverage its out-of-store marketing by distributing sweepstakes entries, continuity offers, and other information tied to the chain’s ongoing branding initiatives. “A true in-store loyalty program shouldn’t just be about discounts,” says Banks.
Going Places
Other non-traditional retailers are following Petsmart’s lead. Rival Petco is testing kiosks in a handful of stores. Wal-Mart is printing promotional messages on receipts in some locations. Kmart continues to slowly introduce an in-store shopping and promotional system called Kmart Solutions. And The Benjamin Moore Co. is talking about upgrading current P-O-P programs in all 3,500 dealer stores to an electronic system in 2001, says Leslie Harrington, the Glendale Heights, IL-based company’s director of design and color.
“Most consumers aren’t loyal and aren’t satisfied,” says Al Witteman, executive vp-marketing and sales with Creative Solutions Group, Fairfield, NJ. “From a promotional standpoint, it takes a new way of thinking to succeed these days. So non-traditional stores are changing [their strategies].”
Drug stores such as CVS and Eckerd continue to up their in-store antes, with many handing out customer-specific information and offers. Polo Ralph Lauren’s new stores distribute promotional offers on branded Polo Jeans computers. NewsAmerica group vp-business development Jesse Aversano says his company is talking with several superstore chains and will begin a test with one this month. “Non-traditional retailers have had trouble breaking through industry clutter,” he says. “Now they are realizing that all retailers need to differentiate themselves, not just some.”
Even QSR giant McDonald’s is taking the plunge. All of the Oak Brook, IL-based chain’s 80 restaurants in Hawaii are involved in a campaign through which McExtra Card-carrying customers receive awards based on purchases. An estimated 40 percent of the state’s populace is participating in the program, which redeems points for discounts and prizes instantly at checkout. McExtra cardholders reportedly spend $1 more per visit than non-card carriers, translating to a 16.7 percent lift in average purchase volume – enough reason for McDonald’s to expand the effort to the mainland. “We’re looking at the program with great interest for use in other U.S. markets,” confirms spokesperson Amy Murray.
Other non-grocers are just as interested in harnessing the power of in-store marketing. Blockbuster, Inc. earlier this year teamed with Dallas-based retail technology firm Retail Services to create a stand-alone operation called Freebie, Inc. The company will provide in-store marketing services to retailers via Smart Offers, a system that lets chains tie into their own membership databases to make store-specific offers and also allows outside partners to get involved.
The first retailer to use the system? No surprise: Dallas-based Blockbuster, which will have Smart Offers fully deployed in all 5,000 U.S. stores by the end of this month. The chain is counting on the system to increase store visits, raise individual transaction numbers, and activate new members. (The third-party ad revenue shouldn’t hurt, either). “More sophisticated consumers require more sophisticated marketing,” says Freebie vp-sales Steve Krumholz.
The program is extremely flexible, allowing Blockbuster to change the type, duration, and cost of offers in real time based on database information. There currently are several dozen different offers being handed out to customers as they leave stores. When a shopper is checking out, a message goes to Blockbuster’s database, which calculates the appropriate offer and sends a message to an on-site receipt printer.
Third parties now serving shoppers Smart Offers through Blockbuster outlets include T.G.I. Friday’s, Jiffy Lube, General Nutrition Center, Eckerd, and AMC Theatres.
“Other retailers will follow. This is the trend for the future,” says Greg Smogard, division president of Blockbuster Business Solutions, a business-to-business subsidiary launched earlier this year. “You have to be technology-sensitive and get as close to your customers as possible.”
Green Grocers
The vast majority of in-store marketing dollars still goes into supermarket programs, where packaged goods makers are always seeking greater ways to win over shoppers. Among happenings in the traditional grocery world, a new crop of kiosks are allowing many of the nation’s smaller chains to begin their first in-store marketing activities.
Grand Rapids, MI-based Prevo’s Family Markets, a 10-store chain located in western Michigan, just installed kiosks manufactured by Farmington, CT-based Tactical Retailing Solutions in its 35,000-square-foot stores. The kiosks offer discounts good on both branded and private-label SKUs, but Prevo’s isn’t stopping there. The small retailer is using the machine, called The Personal Savings System, to distribute purchase incentives as well. For instance, shoppers who spend $25 during a visit can buy one of four items displayed on-screen for 25 cents.
“We’re moving product, and customers are happy,” says Aaron Prevo, the chain’s chief administration officer. “We’ve never done in-store marketing before. But already we know we’ll expand this program.”
Other micro chains such as Lees Supermarket in Westport, MA, and Paw Paw Shopping Center in Paw Paw, MI, are taking similar tacks, using kiosks to offer discounts and promotions. Clements’ Markets in Portsmouth, RI, uses its kiosks for a children’s continuity program; kids swipe their club cards and print out black-and-white pages they can color later, along with coupons moms can use right there.
Meanwhile, large grocery chains such as Kroger and Safeway and their packaged goods suppliers are using in-store systems in new ways, spurred by an increased number of loyalty programs – 10,000 and counting, according to Retail Systems Consulting in Naples, FL – now in operation. An upcoming test of “Smart Cards” in the Southwest could lead to the card’s proliferation by way of marketing, after several failed attempts by financial service providers to jump-start the technology.
The five-month test, orchestrated by NewsAmerica and its SoftCard Systems affiliate, begins next month in 12 Furr’s Supermarkets stores in the Albuquerque, NM, area. The Smart Cards are currently being mailed to 5,000 Furr’s Club Card members. (Other customers can sign up in stores.) “We’re looking to do more with our marketing,” says Furr’s spokesperson Susan Skaggs. “This is something different that can help benefit loyal shoppers.”
Store aisles will be peppered with digital machines that announce discounts for nearby products. Consumers dip the Smart Cards into the machines, which log requests that are then activated at check-out. The cards can hold up to 100 different offers, and can also be used to give shoppers year-to-date spending totals or other purchase information. Some 30 product categories from participating CPGs will be represented at launch.
The aforementioned kiosk from Tactical Retailing Solutions (TRS) will debut shortly after initial tests at Giant Food Stores and Stop & Shop. The kiosk’s multiple capabilities include a feature that pages the store manager when a certain customer – a heavy spender, say, or a constant complainer – swipes his card. More typically, it prints out letter-size sheets of offers five seconds after a card is run. It can be tied to databases for customization or used to issue blanket offers. The printed sheets contain barcodes that are scanned at checkout.
How to Be a Player
Along with new systems come new ways to utilize them.
Supermarkets have long used loyalty programs to hand out free turkeys at Thanksgiving, but recent efforts are becoming more sophisticated for brands and more exciting for shoppers, says Poul Heilmann, senior vp-global marketing for Norwalk, CT-based InterAct, which manages ShopperPerks kiosks in about 2,000 stores. Blockbuster’s Freebie unit is designing a sweepstakes component for the Smart Offers system. Catalina Marketing, which currently tracks 165 million purchases from 17,800 grocery stores per week, has revamped its coupon network to include targeted sampling at checkout. Catalina vp-business development Cary Siegel says a growing number of retailers are also inserting games and sweeps components into their efforts, registering shoppers for contests whenever they swipe loyalty cards. “There’s a lot more they can do,” he says.
Compton, CA-based Ralph’s Grocery Co. just finished a campaign in which Ralph’s Club shoppers could win prizes, including trips for two anywhere in the world, $2,000 shopping sprees, and a year’s supply of Minute Maid drinks, whenever they used their cards. Five winners were awarded prizes each day in May.
Richmond, VA-based Ukrop’s is running a Race to Win effort with Pepsi-Cola Co. in which Ukrop’s Valued Customer Club members automatically receive one “lap” for every 12-pack of Pepsi or related product they buy. Shoppers collect laps to win various prizes, and can track how many laps they’ve earned by running their cards through a kiosk. At 25 laps, the machine prints out a voucher for a Jeff Gordon T-shirt. At 50 laps, customers get a voucher for a Gordon cooler, and at 200 laps, they earn an invitation to meet the NASCAR star.
“Understanding our customers’ shopping behaviors, lifestyles, and requirements – and satisfying those needs – is key to our customer-centric focus,” says Cheryl Palmer, senior vp-strategic marketing with Montvale, NJ-based A&P. The 450-store chain this month launches One-To-One Direct, Catalina’s direct-mail program that sends individual offers to customers based on past transactions.
There’s more than one way to cook a goose or a gander.
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