Mass-market coupons are alive and well, but an increasing number of retailers are moving to new personalized discounts and promotional messages. Supervalu, Price Chopper, Ukrop's and Green Hills Farms are among the retailers that have adopted various technologies that enable shoppers to get offers designed exclusively for them.
Such consumer-centric capabilities are touted as a way to develop an ongoing dialogue with consumers and therefore gain store loyalty.
“It's not so much about cents off, but relevance — information that's important to you as an individual,” Ukrop's marketing vice president, Scott Aronson, told SN.
Ukrop's newly rolled-out Savings Spot program gives participants who scan their loyalty card at in-store kiosks a sheet of paper containing about eight offers and promotional messages selected just for them based on their shopping history.
Provided by Hartford, Conn.-based Tactical Retailing Solutions/Entry Point Communications, the technology is designed to enhance the shopping experience. EPC's software analyzes category purchase history to provide the most relevant offers for each shopper.
“We want to make sure that coupon offers are ones that shoppers perceive as valuable,” Aronson said.
Aronson declined to discuss customer participation or redemption rates, but said that Ukrop's is encouraged so far by customer interaction with the unit.
“What they tell us is that the offers they receive are for products they typically planned to buy that very day,” he said.
Along with manufacturer coupons, Savings Spot delivers promotional messages about Ukrop's own products and services, including its Full Circle private label and its meat department specials, for example.
“We're excited about having an efficient means of getting the right offer to the right consumer at the right time,” said Aronson.
Schenectady, N.Y.-based Price Chopper is another TRS/EPC client. Its program operates just like Ukrop's Savings Spot, only under a different name: “iSaveToday.”
TRS/EPC says at least two other retailers are expected to start using the technology by the summer.
“Retailers see the value of using this as a communication link to their customers,” said Seth Epstein, EPC president.
At least 165 brands are currently participating in the program, with an additional 30 on the way, according to Epstein.
Epstein declined to discuss redemption rates or the level of consumer participation. He did say, however, that the best store customers are the program's best participants.
Participating retailers benefit by letting shoppers know they're focusing on their individual needs, Epstein said.
“The way to build customer loyalty is by showing people that they will not be treated like everyone else — that they are special,” he said.
Along with Ukrop's and Price Chopper, other retailers are using personalized coupon-based programs to drive store loyalty.
Minneapolis-based Supervalu, for instance, has introduced “avenu” kiosks at its Jewel-Osco and Albertsons stores.
As reported, once users scan their loyalty card, they receive a sheet containing 12 offers, all but one targeted to the shopper's household based on previous purchase behavior. Discounts are delivered automatically at the checkout when the card is scanned.
Paw Paw Shopping Center, a one-store independent in Paw Paw, Mich., takes a different approach to couponing. Since last October, the retailer has been using a program that allows shoppers to scan coupons at home and redeem them electronically in the store.
To participate in the program, shoppers pay a $1 monthly fee for a personal coupon scanner that scans up to 150 bar-coded coupons at a time. The scanner, which can be affixed to a key chain, can also be purchased for $49.95.
The coupon data can be transferred to a home computer or a kiosk located inside Paw Paw. Nearly all shoppers choose the latter.
Once the data is downloaded, shoppers can print out a list of scanned coupons at home or at the kiosk. Coupons are automatically redeemed when a shopper's discounted products are scanned at the point of sale. The coupons are then electronically cleared for manufacturers. Offers can only be redeemed at Paw Paw.
Downloaded coupons are held in a personal “coupon bank,” which allows shoppers to monitor their coupon usage and expiration dates.
The system has been working well from a technology standpoint, said Paw Paw President Marv Imus.
“Customers who use coupons are thrilled with the concept,” Imus said. “It's very easy and comfortable for them to use, because it converts paper coupons into electronic coupons.”
The only caveat is that Paw Paw, like many retailers, has positioned itself as a frequent-shopper-card store, and therefore has encouraged the use of loyalty cards over coupons. As a result, just 10%, or about 700, of its shoppers are currently coupon users. Of these, about 300 are currently using the scanners. That means Paw Paw is tasked with getting more customers to sign up for and use the program.
Despite this, the system has given Paw Paw an easier way to track the shopping habits of coupon users.
“Before, we would bundle up all the coupons and send them to a clearinghouse. We never really analyzed the types and face values of the coupons being used,” Imus said.
The scanner has improved customer loyalty by positioning Paw Paw as the exclusive provider of a process that simplifies shopping, he said. “It helps me create a personal relationship with the consumer, which I can't do with mass marketing.”
Paw Paw shoppers never have to worry about clipping and managing coupons again, Imus stressed. “We take care of that for her,” he said.
Created by ScanAps, Los Angeles, the system also enables Paw Paw and its manufacturers to add targeted offers to a shopper's coupon bank. Paw Paw plans to take advantage of this service in the near future.
The technology may be tested by an additional three retail chains — one in Illinois and two in New York — representing a total of 93 stores, according to Vijay Chetty, ScanAps' president and chief executive officer. The first test is slated to run in five stores in July. Chetty declined to elaborate.
Chetty said retailer interest is growing because the service provides store exclusivity. “If a person has 100 coupons that can be redeemed only at Paw Paw, consumers feel they will save more if they go to Paw Paw,” he said.
According to test results, the program is increasing sales. Paw Paw loyalty cardholders with coupon scanners spent an average of $297 between October 2006 and March 31, 2007, up from $136 for the same period in 2005-2006.
Green Hills Farms, Syracuse, N.Y., is also seeing positive results from its year-old loyalty program. Redemption rates, shopping frequency and spending have all grown thanks to SmartShop, a technology that provides customized savings based on individual buying habits.
Participants receive about 20 personalized offers each week once they sign up with the store's free biometric finger-scan identification system, provided by Pay By Touch, San Francisco. This system enables shoppers to identify themselves at the checkout and at in-store SmartShop kiosks by placing the tip of their index finger in a scanning device.
Once registered, members can create and access a personalized shopping list via email, a dedicated Green Hills Web page or a SmartShop kiosk. The savings are electronically delivered into the shopper's transaction when she makes a qualifying purchase.
The launch of such programs comes at a time when the food industry is looking for new ways to boost store loyalty.
True, most retailers have loyalty cards, and most use them to collect valuable consumer data. But few have made a serious effort to use the information to build loyalty, said Glenn Hausfater, managing director, Partners In Loyalty Marketing, Chicago.
Many times retailers will simply sell the data to manufacturers, who in turn use it for direct-mail initiatives.
“It's not a case where the data has failed, but a case where what we have done with data has failed,” Hausfater said.
While the aforementioned programs can certainly drive loyalty, the challenge is in getting enough shoppers to use them, he said.
“The question is, how many people will actually participate in it?” said Hausfater, citing that such initiatives will appeal largely to a younger, more technologically advanced demographic.
He added that a retailer's top shoppers, or the 10% that drive about 50% of a retailer's business, are price-sensitive, but are not big coupon users.
“The kiosks are interesting, and there will be a cadre of people who use them. But if retailers think it will solve the loyalty problem, they are mistaken,” he said.