Viewpoints

Summer Promotions Target Economic Heat Wave

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Food retailers are finally showing their kinder and gentler sides by launching programs that acknowledge the plight of cash-strapped consumers.

Until recently, grocers weren't fully taking advantage of an opportunity to connect with shoppers as the economy fell into a tailspin and customers faced higher prices. Grocers, of course, automatically benefited as consumers switched from dining out to eating more meals at home. True, many chains launched programs around economic stimulus checks, and a large number fine-tuned offers in response to economic news. But most avoided unveiling large-scale initiatives to attract and keep hard-pressed shoppers.

Until now. A flood of new marketing efforts shows how food retailers are competing for these consumers in innovative ways. Promotions leverage the entire toolbox of retail marketing, incorporating high-low and EDLP pricing, loyalty card programs, seasonal merchandising, coupons and other elements.

Much of the activity centers on the commodity wreaking the greatest havoc on wallets: fuel. Regular unleaded gas prices were approaching $4 a gallon in many areas just as the Memorial Day weekend got under way. Retailers ranging from Kroger to K-VA-T responded with programs connecting grocery purchases to gas savings. Kroger expanded its fuel discount program by linking the promotions of its family of stores around the country. The retailer's cardholders receive a discount of at least 10 cents per gallon at its gas stations for every $100 they spend at the grocery stores. Shoppers using a Kroger credit card get a 15 cents per gallon discount.

Yet consumers do not live by fuel alone. Surging food prices are prompting a series of additional promotions. H-E-B unveiled a “Big Savings Start Here” program late last month in the Houston area that reduces thousands of prices and boosts the value of weekly promotions, partly through new coupons. The company clearly tied the program to the economy with comments by a top executive about how consumers are increasingly challenged by higher prices.

Stop & Shop extended its existing EDLP program by lowering prices on more than 40 types of ice cream cones and toppings. While the move wasn't marketed with a direct link to the economy, it certainly gave the impression that the retailer was in touch by making ice cream more available to frazzled consumers just as the summer began.

The award for least subtle (yet on target) marketing pitch goes to Aldi, the discount chain of limited assortment stores, which circulated a press release promoting its economy-busting prices. “As food prices go up, up, up, Aldi prices remain less, less, less at the checkout,” the message began.

Behind Aldi's communication is the reality that discount food retailers are hoping to capitalize on trading down by shoppers who can't afford conventional outlets.

Food retailers' efforts will not reverse the economy's direction, but their promotions may just break up the economic heat wave with a little bit of summer breeze.

Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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