While obstacles surrounding retailer/manufacturer collaboration can be hard to overcome, the spirit of cooperation seems to be prevailing -- as each learns to utilize the other's strengths to reach consumers in-store.
"One of the most important things that both manufacturers and retailers are realizing is that the world of the shopper in the stores is becoming more relevant and more important in priority every day," said Mel Korn, chief executive officer of Collaborative Marketing Worldwide, New York. As retail channels continue to fragment and media sources proliferate and fragment as well, the store is becoming more and more a marketing medium in its own right.
Korn pointed out that manufacturers and retailers are starting to realize that while their agendas are different -- brand building vs. retail strategy -- their goal is the same: Reach the one figure that is both brand consumer and store shopper. The benefits of a successful and truly collaborative approach to reaching that target can be high.
Coborn's, an independent retailer based in St. Cloud, Minn., has realized this. The chain won Creative Choice awards from the National Grocers Association in the last two years for its cross-merchandising and collaborative promotions with manufacturers. Andy Knoblauch, vice president of sales and marketing, said the store continues to run more and more collaborative programs with vendors.
"Manufacturers come to us to decide where they are going to spend their money; obviously, they are going to spend their money where they are getting the bang for their buck. My goal at Coborn's is for us to be the retailer that gives them that bang for their buck."
Coborn's has run a number of different programs tying manufacturers from all categories to its stores through freestanding inserts, cross merchandising, circulars, promotions, charitable fund-raisers and meal solution offerings in-store. Upcoming programs include one from ConAgra Foods tying grocery, frozen and meat products together around the movie release of "The Hulk" in May, and another in which Clorox will deliver pre-built pallets co-branded with the Coborn's logo in a display- and sign-ready program.
This year, Coborn's won the Creative Choice award for merchandising for a program called Neighbors Helping Neighbors. In response to the layoff of 2,500 employees from a local company, Coborn's contacted its vendors, primarily in grocery categories, to help sponsor a food drive. Through matching donations from the vendors and Coborn's stores, the drive collected over 100,000 pounds of food for local food pantries, Knoblauch said. He believes the success of the charity event was due to the cooperative relationships the chain already had established with its vendors.
"If you treat the vendors right, they treat you right," he said.
This cause-oriented approach never hurts a promotion, according to experts, and is even more beneficial when combined with concrete, measurable benefits for all parties involved. This is the symbiosis that programs such as the year-old Upromise bank on. In grocery stores, Upromise links manufacturers with consumers to raise money for college education. Between 3% and 5% of the money that shoppers spend on selected products, primarily grocery items with a partial skew toward dairy, go into a 529 tax advantage college savings account that Upromise consumers can access through an online account. The program crosses into other retail channels as well; in the grocery vertical, 26 different manufacturers are currently participating, involving over 5,000 products, and close to 16,000 supermarkets and drug stores nationwide. The money that is donated comes from the manufacturers, said David Rochon, senior vice president responsible for the grocery vertical at Upromise. For them, the lure lies in incremental sales that are driven through the program. For consumers, the benefits are obvious: free money toward a college education. Retailers participate in the program without donating any money or advertising efforts and the pull for them lies in the halo effect of being involved with a feel-good cause. The retailers who have benefited the most, Rochon stressed, are the ones who have taken an active role to help promote the program.
"It's those retailers who, by their own power of communication to the consumer, have taken the leadership role. It is through that process that individual retailers have had a significant advantage in their marketplace, which we can see based on the numbers of consumers that have signed up [with Upromise] for particular retailers."
Giant Eagle, Ukrops and Stop & Shop are among the chains that have conducted noteworthy Upromise promotions, Rochon said. Giant Eagle in Pittsburgh, for example, launched a television commercial advertising its involvement and stressing consumer benefits. The chain also supported the introduction of the program in Pittsburgh by donating 1% on everything spent in the chain's area stores during a set time period. Rochon estimates that close to 90% of the stores involved in Upromise also have channel strips and shelf signage marking products in the network.
Rochon said he thinks part of the effectiveness of the program lies in its ability to surround the life of the consumer with a wide spectrum of products. It is this 360-degree approach that Korn said retailers and manufacturers must take to reach shoppers.
"If you look at Wal-Mart with 100 million shoppers, or an Albertsons or Kroger with 20 or 30 million, that is millions of eyeballs with money in their purse or pocket ready to shop. There are very few television shows that deliver that kind of audience," Korn told SN.
Other chains, such as Clemens Markets, Kulpsville, Pa., have taken an encompassing approach to marketing as well. The regional chain recently partnered with manufacturers including Herlocher Foods, Quaker Oats Co., Tasty Baking Co. and Coca-Cola to sponsor a mobile marketing program called the Clemens Sampling Trolley. As previously reported by SN (March 3, 2003), the vehicle travels from store to store with a sampling program for consumers. Thus far, the program has been deemed a success.
"We've looked at all angles of this, and its coming out to a tremendous plus for all the players, the operator, the store, the vendor and the customer," said Anthony Aquilante, president of Executive Dining Cars, which runs the customized food-service trolley.
This spring, a number of chains have also signed on as part of a mobile tour headlined by Cooking Light magazine. Ukrops, Bashas', Albertsons, Nob Hill Foods, Kroger and Harris Teeter stores in 70 cities will participate in the program over the next seven months. "On the Move" consists of a converted 18-wheeler outfitted with kiosks and video monitors. Recipe cards, samples and coupons are offered to consumers who tour the truck. Sponsors include primarily Center Store brands such as French's, French's Gourmayo, Barilla, Hershey's Sugar Free, Lean Cuisine/Lean Cuisine Skillet Sensations, Orange Clean, Purina ONE, Smucker's and Saran Disposable Cutting Sheets.
These kinds of integrally linked promotions seem destined to continue. Knoblauch of Coborn's said he's seen major events sponsored by manufacturers in his stores increase significantly over the last few years, and predicts a continued upward trajectory. And he's not alone.
"This will become the critical go-to market strategy," Korn predicted. "With consolidation continuing in the retail business, the prime medium will be the retail store, not at the exclusion of other forms of media, but it will be critical."