While electronic promotion methods, such as in-store kiosks, clipless coupons and a variety of Internet initiatives, are finding acceptance with some retailers, marketing executives are still gauging their effectiveness compared with traditional marketing methods.
These technology-based vehicles may get a boost as retailers seek to more effectively target promotions to specific shopper groups, often using their customer-loyalty programs.
Retailers are giving more electronic in-store promotions a try. For example, Giant Food, Landover, Md., and Edwards Super Food Stores, Carlisle, Pa., a division of Ahold USA, Atlanta, are offering clipless coupons. G&R Felpausch Co., Hastings, Mich., and most banners under A&P, Montvale, N.J., use kiosks to promote specialty items and offer discounts.
But many retailers continue to rely on proven promotional methods. "The point of using promotions is to drive traffic into your stores. Sometimes it's the traditional displays that drive those sales," said Tracy Wiese, director of communications for Byerly's, a division of Lund Food Holdings, Edina, Minn.
Whether implementing traditional endcap displays or experimenting with new technology to promote sale items, however, the strongest options seem to be those that promote customer loyalty as well as product.
"Frequent-shopper programs are the way many chains are headed," said Michelle Rusche, advertising manager at Scolari's Food & Drug, Sparks, Nev. "The customer database allows chains to obtain valuable information that can be crucial in making marketing decisions.
"Unfortunately, sometimes with too much technology, retailers tend to lose that 'person-to-person' edge," she added. "However, it is frequent-shopper programs that bring back the 'hometown store' basis. By using the database, retailers can greet and provide the right products, thus reinventing that personalization."
In-store uses of electronic promotions include clipless coupons and interactive kiosks, both of which are often tied to the store's point-of-sale.
"On an industrywide basis, I am unsure of the impact of clipless coupons, but we see a strong acceptance of this in the Baltimore-Washington area," said Mary Jo Torrey, manager of marketing support for Giant Food.
Kiosks, generally accessed via a customer's frequent-shopper card, allow users to select sale items they plan to purchase during the shopping trip. The discount is electronically transmitted to the POS, and price reductions are applied upon checking out.
Retailers agree that customer usage will make or break the success of kiosk-based promotions.
"I have a seen a number of retailers introducing kiosks in their stores," said one industry observer. "However, unless a retailer can get more than 10% of its consumers to use the technology during their shopping trips, the kiosks are not worth the retailer's time or effort."
Giant Food's Torrey sees a future for promoting items via kiosks, though she agrees the units still need to prove themselves in the stores.
"They can be effective. I have seen different kiosk programs; some good, and others only mediocre," she explained. "But there are some retailers that use these as a way to wean customers off of clipping their own coupons, including manufacturer coupons. Whether a kiosk will be used long term to drive those type of sales, I am still unsure."
The Internet is another technology that retailers are experimenting with for store promotions, though it is also receiving mixed reviews.
Brodbeck Enterprises, Platteville, Wis., which operates Dick's Supermarkets, is planning to offer clipless coupons via its web site, which is scheduled to go live by the end of the year. "The Internet is still slowly evolving in the supermarket industry," said Scolari's Rusche. "While it will eventually have a place in the industry, I think it is still too premature to help us" promote items and drive sales.
Bashas' Markets, Chandler, Ariz., also sees the Internet eventually making an impact, though not yet in the area of promotions.
"For the amount of people that are on the Internet so far, we cannot rely on it to replace our weekly circular of specials," said Becca Anderson, spokeswoman for Bashas'. "Unless we have an order form by the promotion circular on-line, I don't think customers have the time to sit reading a web site, scanning the weekly specials, then hitting the store."
Another area of electronic promotions showing promise is the use of targeted e-mail.
"I think this is could be a dominant way to have a relationship with consumers in the future," said Byerly's Wiese. "We already have a good rapport with our customers via e-mail and modem. It would be for this group, and the addition of other customers, that would make promotions via this vehicle a potentially positive method."
Giant's Torrey agrees. "This does have high possibilities. As someone hits a retailer's home page, we can record their e-mail address and follow up with them on promotions and special offers via e-mail," she said. "This is definitely something that can take the Internet to the next level for the industry."
As with other types of promotions, a sufficient audience is needed before retailers will invest. "For the amount of people on the Internet today, the number is still too small to make targeted e-mail feasible," said Bashas' Anderson. "In addition, sending this e-mail could be viewed as 'junk-mail' and turn consumers off to you."
Scolari's Rusche agrees. "Having e-mail pile up in your mailbox can be compared to junk-mail sent to your home," she explained.
"I am unsure of how much customer-specific e-mail would be looked at. I would estimate that a typical consumer who receives junk e-mail messages from on-line providers in bulk delete a good two-thirds of the files," she added. "I am unsure if this will help retailers to target promotions in the future. We will have to see."