INTERNET MARKETING CONFERENCE

DEENA AMATO-McCOY

ATLANTA -- By marrying its frequent-shopper data with the power of targeted Web-based coupons, Ralphs Grocery Co., Compton, Calif., has increased its frequent-shopper market basket size three-fold.

"Our objective is to customize coupons to each customer," said Rick Gibb, director of sales and marketing for Ralphs. "The Internet is one channel letting us communicate with our customers, particularly our club members, in a one-to-one fashion."

Gibb and David Rochon, president and chief executive officer of Supermarkets Online, Greenwich, Conn., a division of Catalina Marketing, St. Petersburg, Fla., presented "The Internet Is Ready -- Are You?" at the Internet Marketing and Promotions Seminar here earlier this month. The conference was sponsored by the Grocery Manufacturers of America, Washington; Retail Systems Consulting, Naples, Fla., and planet U, San Francisco.

"When Ralphs asks customers to enter their frequent-shopper number on ValuPage, the retailer is using customer purchase records to personalize offers based on their shopping history," said Rochon. "This helps to provide discounts on the items that are most important to them [consumers]."

Ralphs, a division of Fred Meyer, Portland, Ore., and soon to be a subsidiary of Kroger Co., Cincinnati, as of the first quarter of 1999, launched both its frequent-shopper program, Ralph's Club, and its Web site, www.ralphs.com, in Oct. 1997.

The retailer launched its secure, "Web-only coupons" through Supermarkets Online's ValuPage in June, according to Gibb.

"We are offering in excess of $50 of value a week," he explained. "This is between two to three times higher than offers available in a typical freestanding insert."

Since offering the targeted coupons, the retailer reported its average frequent-shopper customer transactions are three times higher than those customers not accessing coupons via the Internet.

According to Gibb, an average transaction of a cardholder using ValuPage is approximately $77, while a customer not accessing ValuPage discounts spends an average of $23. Nationwide, the average customer transaction is $19.20, according to the 1997 Supermarkets Facts Survey, issued by the Food Marketing Institute, Washington.

Customers can access customized offers by entering their frequent-shopper card number on a designated area either on Ralph's Web site, or through Supermarkets Online, at www.supermarketsonline.com. After customers select their choices they print out a page listing the discounts and a bar code.

When customers bring the page to the store for redemption, the bar code triggers a Catalina printer, located at the point-of-sale, which produces a "Web Buck" certificate. The Web Buck reflects the savings for each item purchased during the visit, and the certificate can be used during their next shopping trip.

"The electronic coupons are one of the most popular destinations on our Web site," he added. Though the program is operated by a third-party company, "it is perceived as a Ralph's program. Even if accessed through Supermarkets Online, Ralph's name appears on the page they select, as well as the Web Buck, reinforcing brand and customer loyalty."