BOCA RATON, Fla. -- With only eight stores in northern Alabama, Gregerson's Foods is a David next to its Goliath-size competitors, which include Bruno's, Food World and Winn-Dixie.
So Gregerson's is launching a frequent-shopper program in March to retain its loyal customers and lure others away from its gargantuan competition.
The program, called Club Greg, will offer a minimum of 5% to 8% savings to customers on a typical grocery order.
"In today's retail world, with all of our competitors screaming for our consumers' attention, we need to be able to come up with an all-encompassing program, a core program to differentiate us and separate us from our competitors," said Peter Gregerson Jr., president and chief executive officer of Gregerson's Foods, Gadsden, Ala.
"No offense to our competitors -- the very great companies of the Bruno's and the Winn-Dixie's -- but because of our small size and the fact that we are flexible, we believe we can manipulate the information that we get from this marketing program and zero in on who our customers are, what they want and get closer to them and serve them better than our competitors can," he said.
Gregerson unveiled his company's strategy at the Food Marketing Institute's Midwinter Executive Conference here. Along with retail consultant Brian Woolf, Gregerson presented a frequent-shopper-program study commissioned by the Coca-Cola Retailing Research Council. The study found that the top 30% of a store's customers account for about 75% of its sales.
The study's statistics support a strategy of targeting customers who spend the most and shop most frequently. The research found, for example, that the top 20% of a store's customers shopped 1.5 times a week, spending $35 on each visit, or more than $2,700 annually. Spending patterns drop sharply, however, with the middle 20% of customers, who shop an average of 0.4 times a week and spend $17 a visit or $354 annually.
Gregerson's program will be launched with a lot of publicity. Teaser advertisements are already running in newspapers. Announcement of the name of the program will coincide with the issuing of cards.
"We hope that we'll be able to subliminally associate Club Greg with Club Med, because we're going to be giving some trips away as part of the program," said Gregerson.
Initial advertising will feature the peripheral benefits of being a club member, including check-cashing privileges, video rentals, automatic senior citizen discounts and automatic registration for prizes and drawings in the stores.
"Consumers will know about these benefits even before we get to the core of the program, which obviously is the price savings," said Gregerson.
"We're going to convert our manufacturer's pass-on allowance program to the card program. We're also going to go it one better by using a great deal of our ad mark-down dollars to supplement the pass-ons."
Further, the retailer is going to convert double-coupon program dollars to the frequent-shopper program, an additional source of financial support for the program.
Gregerson's Foods annual sales are about $85 million. Its stores average about 35,000 square feet. The company originally started as a warehouse operation, but evolved into stores with a more conventional format.