DELI COUPON PILOT YIELDS HIGH REDEMPTION RATES

MICHAEL GARRY

FENTON, Mich. - VG's Food and Pharmacy here is boosting sales of Center Store products by offering deli customers coupons for complementary dry grocery items.

In an 11-month pilot at VG's, shoppers redeemed a comparatively high percentage of branded coupons printed by a deli scale system along with the price label.

The coupons, for deli-related items like potato chips, mayonnaise, napkins and soft drinks, are detached from the price label that is attached to a deli package. Both coupon and label are generated by a conventional Quantum model scale made by Hobart in Troy, Ohio, that was configured for the process.

John Morgan, executive director of the Association of Coupon Professionals in Des Plaines, Ill., said he is not aware of a similar method of coupon distribution in the market today.

The only test site for the system, VG's tested the system at six of its 14 stores, with another six serving as control stores, said VG's spokesman Bill Ogle. Though he declined to provide exact figures, Ogle reported that the deli coupons have been redeemed by shoppers at a rate that is "a significant magnitude" higher than coupons obtained other ways, such as freestanding inserts and checkout printers.

Moreover, of the redeemed coupons, 75% are redeemed within a week of the initial shopping trip and usually at the end of that trip. The opportunity to redeem the coupon right away "is the nice thing about this method vs. other ones," Ogle added.

"Customers have been really pleased with it," he said. "It's an offer they weren't expecting."

Carlene Thissen, director of Ogden/RSC in Morristown, N.J., observed that since the coupons are distributed in-store and designed to tie in with deli purchases, "one would expect a higher redemption rate than average, and likely higher than other in-store-distributed coupons that are not targeted." Redemption rates for coupons distributed in-store typically are higher than those distributed via outside venues, like freestanding inserts, she noted.

Hobart, which has financed and supplied the coupons to build a business case for the deli coupon model, hopes to launch the concept by next year, said Robert Schuller, Hobart's general manager of weigh/wrap. The company is discussing the concept with other third-party firms and trying to enlist CPG companies to buy a new coupon distribution method.

In the test, VG's offers one coupon for each of eight deli categories, such as meats, cheeses, salads and hot foods. The promoted product is intended to have an affinity for its deli category, such as mustard for the meat category.

Hobart sends the new coupon data weekly to VG's, which channels the information to the six test stores. Coupons are generated regardless of the size of the order. Store associates apply the coupon-bearing label to the deli package, a straightforward process that's easy to teach, Ogle said. The coupons, which can only be redeemed at VG's, are cleared through the conventional clearing process.

The eight coupon offers are promoted via Plexiglas placards at the deli counter. In addition, a small video display at the deli, used to show the regular and promoted price of deli products, produces images of the couponed items.

Ogle said that while potato chips and soft drinks are the best items to promote, many other Center Store items can be discounted. "There are not many things you can't sell through this, even slow-moving items like Worcestershire sauce," he said. All coupons are selected by Hobart, though VG's occasionally offers coupons for private-label items, such as bakery bread, he said.