SETTING NEW SITES

CHRISTINA VEIDERS / Additional reporting: Liza Casabona

When it comes to exploiting Web sites to build brand recognition, drive shoppers into stores and reward loyalty, supermarkets have barely begun to scratch the surface.

According to the Washington-based Food Marketing Institute, just 37% of retailers are using online marketing programs commonly on an Internet Web site. Offerings on Web sites include store information, recipes, menu planning, food safety information and community news, among others. But consultants and even retailers admit Web site marketing is still very much in its infancy for most supermarkets.

Chains like Giant Eagle, Pittsburgh, and Hy-Vee, West Des Moines, Iowa, are already into their second redesigns and continue to refine and add features.

Hy-Vee launched their site in 1995 and redesigned it last year, making it more user friendly and adding organized links and frames for improved navigation, said Ruth Mitchell, director of communications. The retailer also uses it as a recruiting site by posting job opportunities and applications.

Giant Eagle relaunched its site in April with a sweepstakes of free groceries for a year that produced a boost in online registration. The chain presently has 50,000 registrants and receives about 25,000 visits a week, according to Ian Knott, Giant Eagle's Internet marketing director. The company would like to see its registrant base grow to several hundred thousand.

Web sites certainly have the potential to draw big patronage. In fact, in May there were 641 Web sites that drew more than a million visitors, according to Jupiter Media Metrix, New York. That's more customers than shop grocery stores each month. But the real goal for grocery retailers is to get customers from the Internet into their stores.

"For the most part I don't see a lot of activity that ties the Internet world to the physical world," said Carlene Thissen, president, Retail Systems, Naples, Fla. What's often missing, she said, is a strategy behind the Web site to drive shoppers back into the stores.

"Grocery retailers sort of lost sight of what they can take advantage of and it's not home delivery but a Web site that gives their customers value," said Robert Hemphill, president, Webstop.com, Palm Harbor, Fla.

To move beyond the Web site with contents that are sometimes called "brochureware," a listing of store locations, information from the weekly circular, company history, etc., consultants say it's important to tie in loyalty card programs with the Web site.

"Loyalty cards are the natural method for grocery stores to try to maximize use of the Internet. Food retailers have a lot of experience with loyalty programs. They know something about their shoppers through them. The Web connection can close the loop on this data," said James Tenser, consultant, VSN Strategies, Norwalk, Conn. However, he warned it isn't a simple process and requires thought and investment to fully develop.

"It cost to get there," said Tenser. "You need an infrastructure behind it, data warehouse ability and the ability to mine the data, to link it to two points of contact at the point-of-sale terminal and the Web site and maybe to kiosks and other touch points."

Knott says that so far the main connection from online to the store has been discount coupons from planet U. The U-pons are tied into Giant Eagle's frequent shopper program and downloaded onto loyalty cards. "Overwhelmingly, the number of people that come to our site are coming for coupons," said Knott.

But Thissen said promotional services such as valupage.com and planet U, where consumers can go to get discount coupons online, are often not exclusive to one particular chain and it thus doesn't drive additional in-store traffic to a particular chain.

Barry Kotek, managing partner for Retail Systems, points to the importance of compiling shopping lists for customer convenience and eventually targeted marketing.

He noted that scanner technology through cell phones and handheld devices will allow shoppers to scan individual items that can then be used to develop shopping lists through the Web site. This can also be accomplished without a scanner, he noted.

"If you have frequent shopper data and intent of purchase data (through the shopping list), then you have two different sets of data that you can use to do some targeted offers to the consumer," said Kotek.

As an example, if a customer puts an apple pie on the shopping list and doesn't list ice cream, the retailer would be alerted and could offer a cents-off coupon for private-label ice cream. "Then you are trying to drive the site traffic into the store, plus pick up incremental purchases," Kotek said.

Knott of Giant Eagle speculates that hardware may be hampering development of Web sites' full capability for grocery. "People still have to go to a separate room in their house and dial up on a phone line, wait for it to come on. [In the future] people will have touch screens built into their refrigerators or they will have handheld devices. Those appliances really haven't caught up with the opportunity that the Internet can provide us," he said.

According to Hemphill, the cost of building a Web site varies depending upon its complexity. NetMarketing's Web Price Index states that the average price of developing a small, simple Web site is about $26,000. A medium-sized Web site with additional features is over $100,000, and a large site with all the new technologies costs over $500,000.

Consultants advise that retailers should put as much thought into their Web site as they do new store formats.

"Mastering this medium is going to be essential to all retailing. It can be a leveler, too. It can help put a local grocer on equal or better footing with a large chain. Loyalty matters a lot. In the end, the business that has the most loyal customers is the winner," said Tenser.

Several misconceptions grocery retailers may make in building their sites include considering it as a profit center. "It becomes part of the marketing tool box," said Knott, in building and strengthening customer relationships.

Tenser warned retailers not to make a disconnect from the store's marketing policy. "Don't assume the online customer is a different person than the person in the store. Retailers should never put their core equity or relationships at risk by doing something online that conflicts with their store policy."

"The biggest mistake is to have a boring site," said Thissen. "Supermarkets should at least try to have something interesting that a consumer would want to go see, or that at least when they get there they would say this is kind of neat."

Given the fact that many grocery retailers are still in the early stages of their Web site development, do retailers really need to have one?

"It's almost as necessary as being in the yellow pages," said Mitchell of Hy-Vee.