Having done battle for market share on a number of fronts, retailers are now gearing up to stake their claim on the Internet, and this time, it's personal.
Retailers that offer consumer-oriented World Wide Web pages are quickly learning the advantages of using their sites as a personal communications link to their customers -- and the more direct and focused, the better.
It is through this direct link that retailers are building customer loyalty by two-way communications via e-mail, offering electronic coupons and, perhaps in the future, Internet-based micromarketing.
In SN's Third Annual State of the Industry Technology Survey, 55.8% of respondents said they will offer a World Wide Web site sometime this year. Among those 104 chains and independents responding, a vast majority said e-mail is one of the strongest components on a consumer site.
"For a retailer to survive in the future, it will need a presence on the Web, and not just a billboard -- there needs to be interaction with customers through the Web," said Patrick Arnold, webmaster for Dorothy Lane Market, Dayton, Ohio.
One retailer that relies on its customer interaction through e-mail is Randalls Food Markets, Houston.
"Customers want to say whether they had a good experience in our stores or if they are upset about something," said Emmett Yuchnewicz, webmaster for Randalls Food Markets. He added, "By reaching us via e-mail, the shopping experience is still fresh in their minds, and we give them the opportunity to relay the message to us instantly."
Seaway Food Town, Maumee, Ohio, which is currently researching the benefits of having a web site, recognizes the value of connecting with shoppers via e-mail.
"With access to customer feedback, whether it is through customer comments or if the retailer is soliciting them, e-mail is a unique capability that is very economical," said Bill Borer, director of information systems for Seaway.
He added, "It is a cheaper medium than mailing surveys or conducting focus groups -- it is an easy, nonthreatening medium."
As direct and economical as e-mail is, retailers are trying to rise above the related challenges, such as keeping up with an influx of electronic correspondence and responding to it in a timely manner.
"E-mail is a new medium for interaction with customers where communication goes back and forth -- it is an immediate means of communication that demands an immediate response," said Joanne Gage, vice president of consumer services for Price Chopper Supermarkets, Schenectady, N.Y.
"Now that the medium is growing, the demand is quite a challenge to keep up with," she added.
Dorothy Lane Market's Arnold agrees. "We have to stay on top of our messages in a timely manner," he said. "If someone sends us a complaint or a question, they expect a response in a matter of hours, not days. This technology requires us to speed up our communications processes and stay alert."
Price Chopper's Gage said it takes her between five and seven minutes to respond to each inquiry if it does not require any research.
"I personally try my best to respond, and if I have to research something, I will send an e-mail reply saying that I am working on it. This way I don't keep them hanging," she said.
In addition to e-mail, most grocery retailers are using other features, such as electronic coupons, through their sites to bring their on-line customers into their stores.
"Everyone loves coupons and loves to earn savings, so we implemented this concept into our site," said Randalls' Yuchnewicz. Randalls customers can download electronic coupons, print them out and then redeem them throughout the chain.
"Our on-line customers like getting special value from our electronic coupons," he said. "It is a user-friendly process and it helps to generate traffic into our stores."
Sobeys, Stellarton, Nova Scotia, launched its consumer web page (http://www.sobeysweb.com) six months ago. In that short time, the retailer is already seeing the benefits of offering consumers electronic coupons.
"In addition to our weekly circular that we post on-line, we also post coupons that can be used in addition to our weekly specials for additional savings," said Wade Taylor, director of retail services for Sobeys.
He added, "Our customers redeem the downloaded coupons in our stores, so while they gain additional savings, we are triggering more store traffic."
Seaway's Borer agrees that on-line coupons are a good way to build and maintain customer loyalty.
"Any deal or discount you can offer your customer is a definite hook attracting them to your site -- that is the responsibility of the retailer if it is going to jump into a web page," he said. "When people come to your site, they need to feel there is something worthwhile they are getting out of it."
According to Borer, this kind of promotion will guarantee customers will continue to visit the stores.
"Retailers need to keep in mind that based on the work they put into the site, their reward will be attracting those customers into the stores," he said. "By adding savings, retailers can keep them loyal."
One retailer, an exception to the rule when it comes to the benefits of electronic coupons, is Dorothy Lane. Its two-year-old site (http://www.dorothylane.com) could not tempt its patrons with the on-line savings.
"When we tried offering coupons on-line, it did not go over well with our customers," Arnold said. "I think the reason for that is we are not a price-sensitive chain. Since Dorothy Lane caters more to quality and exotic products, we may not have the right customer base for that type of promotion."
Though some retailers are able to entice customers through electronic coupons, the electronic promotion is not being used to its fullest potential according to Ken Horner, director of electronic commerce services with Deloitte & Touche Consulting Group, New York.
"With all of the information that can be accessed on web pages, electronic couponing is not at the stage it should be," he said. "It is a great idea, but retailers also have to think about the issues associated with them -- like how not to let customers duplicate them."
As retailers recognize the potential of targeting electronic coupons to consumers, they can also begin to target other services through their web pages as well.
"The World Wide Web will be an integral part of the supermarket business in the years to come," said Seaway's Borer. "One thing I see this medium will do is give us the opportunity to address specific customer needs and identify categories of customers to tie into our marketing plans."
Price Chopper has a similar vision. "As our customers sign up for our customer-specific [frequent-shopper] programs, we will be able to target our marketing to their specific needs," said Gage.
An option that the retailer may try on its 18-month-old web site (http://www.pricechopper.com) is to target specific groups of customers.
"Instead of mass marketing, we could use the site for micromarketing," she told SN. "As people sign on to our site a promotion could be directed to them by name, by frequent-shopper number, or even a combination of both. There are many options."
Deloitte & Touche's Horner said any retailer could target frequent shoppers through the Internet.
"As customers enter their shopper number, they can be directed to click on an icon that reveals a targeted coupon," he explained. "Then they can download the coupon and print it out for redemption. It is a promotion that will eventually happen, but not until all other possibilities have been exhausted."
Sobeys also sees the possibility of targeting its loyal customers through its site.
"We could use the site as a communication vehicle just for our frequent shoppers," Taylor said. "As people identify themselves to us on-line, we can send customer- and group-specific messages and rebates only to them."
Though there are many options for retailers on the Internet, it is evident that the key to success is to stay focused.
"In the long run, communication with our customers through the Internet will help keep our mailing costs down, and speed up our communication processes," said Price Chopper's Gage. "However, right now, we need to communicate and target our customers both electronically and via [postal] mail -- simply because the Internet is not in every home yet."