Archive for May 26, 2012

The Trouble with “Triple Coupons”

Many supermarket retailers could help me write this piece, as they have already (or should I say finally) discovered that offering shoppers the opportunity to cherry pick the store with coupon items causes more problems than the sales and traffic count these promotions create.  There are multiple reasons that such promotions have become increasingly ineffective, unless your goal is to drive a very short-term blast of unprofitable sales.

First and foremost, “triples”  appeal to the most cost-concious, price sensitive shoppers in the marketplace.  Most are already shopping predominantly at Aldi, Walmart, and even dollar stores for most of the grocery needs.  These folks are “students of cost containment”.  They have earned their Bachelor’s Degree in Savings  and are working on their MBA of Promotional Sciences.  In short, they know far more about how to manipulate the retailer  for  super-savings than the retailer could even hope to know about converting this group to loyal profitable shoppers.

Secondly, “Triples” and other traditional promotions do not lend themselves to becoming a proprietary, “ownable” promotion.  Any one can do it and negate any competitive advantage that such programs may yield.

Conversely, fuel programs and other such continuity/ points programs create a special currency that can be claimed as the retailer’s proprietary savings offering.  A clear example of such is the current doubling and tripling of fuel rewards points for those chains that have well developed fuel rewards programs.  The perceived value of such programs also many times exceed the expense of the program, particularly compared to triple coupon promotions.

Finally, there is little or no measurable lasting loyalty effect from triples and others promos like it.  The shopper segment attracted to these promotions will not return and do full basket, profitable shopping with the retailer unless they are heavily invented to do so.  In addition, FSI coupons tend to focus on a few center store and HBC categories….not really conducive to building loyal full basket shoppers.

Let’s face it.  The game has clearly changed.  This extended recessionary economy has fostered a new breed of shopper.  Couple this mentality with the great new technology and applications that enhance the tool box of those that shop predominantly for savings and the result is the shopper is now armed and dangerous.

“Price Shoppers” will never become your best and loyal shoppers (unless you happen to be a $400 billion chain headquartered in Bentonville, AK.)   While it is not a bad idea to reach out to this group  for incremental gains of their “share of wallet”, do it in such a way they play the game according to your rules,  rules that appeal and reward your best shoppers over a longer period of time and involve many departments and categories.





Is There a Store of the Future? Here’s Mine!

As far back as I can recall, we in the supermarket business seem to have a fixation with what our stores will look like in the future. Like all things that require only an opinion, there are many visions and views about this topic.

Adding to the fray, here’s my quick summation of the elements of a prototypical successful store perhaps as soon as 5 years from now.

1. Smaller not larger (25,000 square feet of selling)
2. Far fewer sku’s in center store, but with access to an on-line store where coveted commodity items can be ordered and waiting for the shopper at a delivery door.
3. Fewer cashiers and more scan as you go, or shelf-checkouts.

4. Fewer “racetrack” layouts in favor of distinct stores within a store.

5. And finally, much more interaction with the in-store pharmacy, which will also become a nutritional resource center.

Nothing here that is terribly controversial, but yet for many retailers, much work to do and significant investments to be made to move from the operational-oriented store they have today to a more consumer-centric offering!

“Spirit” Airlines finally gets the “spirit”

As we look to business leaders to provide glowing examples of exemplary customer service, we often learn more from the dolts than the do-gooders. So is the case of Spirit Airlines refusing a “dying” U.S. military veteran a refund for a flight he could not physically take. Yes, that’s right…a dying veteran.

Ben Baldanza, the venerable CEO of Spirit originally went out of his way to explain the logic and business acumen that drove his decision not to refund the meager sum to the veteran, and even was interviewed on TV, explaining his position.

But all he really needed to know to make the right decision, was two words, “dying veteran”. Baldanza eventually retreated from his unpopular stance and provided the refund and even made a donation to a veteran’s charity…but the damage to the already shaky public image of Spirit Airlines  has already been done. I do wonder how some ascend to the position of authority and influence, without the least bit of evident common sense.  To that point, my next post will be about politicians!

A New Definition of “Sustainability”

I’m not sure who is in charge of coining phrases in the supermarket industry, but “sustainability” is one of the most interesting, providing  a wicked double entendre.  The term implies, of course, that retailers operate with eco-friendliness, thus sustaining the environment for the long haul. Given the performance of some supermarket retailers, it would appear they should be focused on sustaining their sales and marketshare before they embark on saving the world.

But to be “sustainable” you must stand for something and bring something to the customer that no other competitor can .  Developing a sustainable market position is not easy.  It takes investment, discipline and vision.  Good companies have long since established  their “sustainable” position in the marketplace.  If you are a retailer and you cannot quickly articulate what your company’s “ownable” and sustainable position in the consumer’s consideration set of food retailers…….you likely don’t have one.