CHICAGO -- A pilot "Baby Club" category destination program at Abco Foods, Phoenix, increased weekly sales of baby products 40%.
At the end of the study, conducted from August 1994 through January 1995 by the American Greetings Research Council, weekly sales of all baby items grew from $194,391 to $270,823, for a six-month total of $6.4 million. Members of the council presented the findings during a workshop at the Food Marketing Institute's 1995 annual convention held here May 7 to 10. Total sales of all baby items were 25% higher than the previous year, according to the council. In individual categories, sales of baby general merchandise products and baby wipes increased 7%; diapers, 17%; baby food, 18%, and formula, 35%. "Our sixth-month test showed us we could cost-effectively increase category sales," Les Knox, a member of the American Greetings Research Council and senior vice president of sales and marketing at Abco, said at the workshop. The council was formed four years ago to develop a long-range approach to marketing general merchandise and health and beauty care. It has representation from American Greetings, Cleveland; the Food Marketing Institute, Washington, and a rotating group of nine supermarket retailers.
The "Baby Club," which was tested at 70 Abco stores in Phoenix and Tucson, gave customers one "Baby Buck" point for each dollar they spent on any baby item in the store. When they gained 100 points, they received a $10 Abco gift certificate toward any item in the store. The promotion was advertised in weekly circulars, on television and with in-store signs.
The council determined this type of category destination program, which encourages customers
to shop specific retailers for select products, can attract new general merchandise and HBC customers.
Baby products were chosen, in part, because annual newborn grocery expenditures per family total between $1,500 and $2,500, according to published reports. Abco recently reinstituted the "Baby Club" for another six months. It is also testing a two-month "Pet Club" program.
Knox said the study showed that relationship-building promotions, which reward customers for successive shopping trips and increased expenditures, can improve customer loyalty.
The costs to run the program were minimal, in part because only 29% of Baby Bucks were actually redeemed. The program cost Abco less than 2% of sales, excluding coupon distribution, promotion and advertising costs, according to "Exploring Relationship Marketing," the council's report on the program.
Along with category destination programs, the council discussed how cross-merchandising campaigns can significantly increase general merchandise and HBC sales. At the FMI workshop, David Steitz, executive vice president of Raley's Supermarkets, West Sacramento, Calif., recapped test results of "Turning Traffic Into Transactions," a report presented at a seminar at FMI's general merchandise-HBC conference held last September in St. Louis.
Though general merchandise and HBC usually increase a shopping trip by $5 to $6, statistics show consumers purchase general merchandise-HBC products on only 20% to 30% of their shopping trips, he said.
Cross-merchandising can help reroute grocery traffic into general merchandise and HBC aisles and encourage them to make more purchases, he said. By linking a general merchandise-HBC item, such as vitamins, to a high-traffic grocery item, such as soup, traffic can be rerouted to the general merchandise-HBC aisle.