Big Y Launches Groupon-Loyalty Card Promotion

MICHAEL GARRY

SPRINGFIELD, Mass. — Last week Big Y Foods here became the first multi-store food retailer to run a deal with social buying aggregator Groupon, reeling in 333 online buyers during a 24-hour fish promotion.

The chain also became the only retailer of any kind to fully integrate a Groupon offer into its loyalty card system.

Big Y's Groupon offer, distributed on June 7 only among Groupon subscribers in the Springfield market, was for a newly introduced private-label Shellfish Grill Pack, including lobster tails, mussels, clams and other seafood; it retails for $39.99 and a limited quantity was offered for $24, a 40% discount.

The deal “tipped” — reached the minimum threshold of committed buyers required by Groupon — at 5:25 a.m. on June 7 with 10 buyers. By the end of the deal period at 11:59 p.m., 333 buyers had selected the shellfish offer. They could begin redeeming their deal on June 9 and have until Sept. 8.

The deal was limited to 25% of Springfield's Groupon subscribers “to keep it small as our first test offer,” said Ben Sprecher, a spokesman for Incentive Targeting, Cambridge, Mass., a shopper marketing technology vendor with which Big Y partnered to implement the Groupon deal.

“We didn't go into this knowing what to expect — we hadn't done anything like it before,” said Harry Kimball, Big Y's director of database marketing. “Three hundred and thirty-three customers will have nice seafood cookouts in the coming weeks and they will tell their friends that the barbecue comes to them with a Groupon used at Big Y. So we are happy with the results.”

Kimball declined to specify the fee Big Y paid Groupon. The chain did not invest in any new hardware or software to support the deal, noted Sprecher of Incentive Targeting.

Ted Zittell, partner with Chicago-based McMillan Doolittle, called Big Y's foray into social buying “an intriguing and timely development,” taking advantage of “changes in how people shop.”

For this test, shoppers who purchased the Groupon entered their Big Y loyalty card membership number, which electronically loaded the deal to the card. The deal is redeemable at the checkout at any of Big Y's 61 stores in Massachusetts and Connecticut. Non-card holders could sign up for a Big Y loyalty card at the same time they bought the Groupon; a card, preloaded with the discount, would be mailed to them. In typical Groupon transactions, consumers print a paper coupon or display the digital version on their phones.

By linking its Groupon deal with its loyalty program, Big Y has given itself the opportunity to measure the effectiveness of the deal in real time, “including how many new shoppers have been engaged, and follow up with these highly desirable shoppers with attractive targeted programs,” said Win Burke, president and chief executive officer of Incentive Targeting, in a statement.

Big Y “hopes to continue the momentum” and offer more Groupon deals, said Kimball. “We're interested to see how everything plays out especially with regard to the load-to-card redemption process.”

While the initial Groupon offer was for a private-label product, Kimball acknowledged the potential for constructing Groupon deals with CPG firms, tapping their large promotional budgets. “Working with CPG manufacturers is an area we will be exploring.”

Groupon has previously orchestrated deals with one-store food retailers such as Fox & Obel and August Grocery, both in Chicago. But Groupon appears poised to pursue other multi-store food retail partners in the wake of its Big Y promotion. “The grocery retail industry is a fantastic opportunity for us that has been largely untapped,” said Darren Schwartz, senior vice president of sales for Groupon, in a statement.