DEALING THE CARDS

JOEL ELSON

Prepaid phone cards have become the perfect companion piece in seasonal merchandising at supermarkets. Increasingly, grocery retailers are targeting seasonal calendar events when they think about their prepaid phone-card programs.

Albertson's, Boise, Idaho, now follows a promotional calendar to focus shopper attention on its private-label 30-, 60- and 180-minute phone cards, said Mike Davis, manager of national accounts at Talk 'N Toss, Vancouver, Wash., the chain's phone-card supplier.

Demoulas Supermarkets, Tewksbury, Mass., dropped the price of its 40-minute prepaid card below the everyday $10 price. This resulted in a 30% jump in phone-card sales during Mother's Day, Father's Day and back-to-school, according to Dave McLean, operations manager for the chain.

"Seasonal and holiday prepaid phone-card promotions like these attract higher sales than on a normal week," said Bill Breitenkamp, director of prepaid calling-card services at U.S. Long Distance, San Antonio, the chain's supplier.

Promotions, especially for private-label phone cards, revolve around price-off seasonal specials; buy-one, get-one-free offers; on-pack bonus cards; and reduced per-minute charges. According to suppliers interviewed by SN, seasonal promotions of prepaid phone cards can boost annual sales by 12%.

Several major chains, including Fry's Food Stores of Arizona, Phoenix; King Soopers, Denver; Southwest Supermarkets, Phoenix; Tops Friendly Markets, Buffalo, N.Y.; and Wegmans Food Markets, Rochester, N.Y., helped their prepaid card business climb at Mother's Day and back-to-school by featuring a 60-minute Call Time card along with a free 15-minute on-pack bonus card for $19.95, according to Greg DeSmith, marketing manager for Rochester, N.Y.-based Frontier Communications International, the retailers' supplier.

"Running value-added promotions with a free second card attached during major holidays and back-to-school builds awareness of the value in these kinds of promotions," he added.

"Back-to-school is a great time to include card promotions, especially at stores near colleges and universities," said Charles Yahn, vice president of general merchandise at Associated Wholesalers' York, Pa., nonfood division warehouse.

According to Yahn, "[students] went nuts" in a buy-one, get-one-free deal for $5-, $10- and $20 cards at several hundred supermarkets from New Hampshire to Maryland last September.

During buy-one, get-one-free prepaid phone-card specials at stores trading in lower economic areas,"where they always sell better, sales spiked much higher," he added.

While the profit is usually slight on a buy-one, get-one free phone-card promotion, "the purpose is to get people to try one and get used to using it," Yahn stressed. Some further examples of how retailers are tying phone cards into various seasons:

Valentine's Day

Touting a free Gibson greeting card with the purchase of a Western Family controlled-label $10 phone card worked well for Valentine's Day and Mother's Day promotions for Associated Wholesalers' retail affiliates, said Yahn. A $10 prepaid card was promoted so that its profit would cover the cost of the greeting card's.

For Valentine's Day, MCI Telecommunications, Atlanta, has started to market combination greeting and phone cards including messages like "I Love You" and "Thinking of You," as well as a floral series called "Especially for You," which is also promoted for Mother's Day. According to Stacy Borocz, MCI's senior manager for retail marketing, these phone cards will go into food channel distribution after the new year. She declined to identify the supermarket chains that plan to promote them for Valentine's Day.

Since June, Wal-Mart has merchandised the selections on a power panel attached to an endcap in the greeting card department. The display has a clear pocket that holds coordinated envelopes. Priced to sell at $6.50 to $9.99 for 20 minutes of calling time, the cards can be personalized with a brief recorded message.

Mother's Day

Albertson's promotes its private-label prepaid cards at Mother's Day using special graphics with a rose motif. Its other promotions include Valentine's Day, Father's Day and back-to-school, said Davis of Talk 'N Toss.

For a Mother's Day event at Jewel Food Stores, Melrose Park, Ill., the retailer gave away coupons for free 10-minute SmarTalk phone cards. "Almost 1 million [telephone] minutes were processed," said Gene Russell, senior vice president of marketing and sales at SmarTalk Teleservices, Los Angeles, the chain's phone-card supplier.

Russell described the Jewel campaign, which also promoted Kodak film processing, as crucial to "attracting new customers for 30-, 60- and 120-minute phone cards, who then become regular prepaid card customers."

Summer

When King Soopers offered customers a 60-minute card, which usually retails for $20, free with the purchase of a $50 151-minute card as a promotion this summer, "150 of the $50 cards were sold within the first three days of the promotion," said DeSmith of Frontier Communications.

Value-added phone-card promotions work particularly well at stores operating in lower-income areas, "where customers usually will purchase two cards as a price incentive rather than as a holiday incentive," DeSmith observed.

During the past 15 months, Southwest Supermarkets' 38 Arizona and Texas stores racked up more than $1 million in sales of Frontier prepaid cards, according to Erich Sielaff, head buyer for general merchandise.

Southwest's prepaid phone-card volume accounts for "an increasingly large portion of our business," said Sielaff. He said point-of-purchase displays from the supplier, coupled with local newspaper and TV advertising, have contributed to the sales gains.

Phone cards merchandised over a longer promotion window of 60 days or more build sales to higher levels by attracting a wider audience, observed Milt Taylor, advertising director at United Grocers, Portland, Ore.

"Not everybody may need a phone card in a promotion that runs in a one- or two-week cycle."

Back-to-School

An upcoming SmarTalk promotion rolling out to retailers for back- to-school offers a free set of children's Polaroid holographic dinosaur stickers with the purchase of a 60-minute card, said Russell.

SmarTalk also plans to offer a school promotion for grocery chains in which consumers can get a free 10-minute SmarTalk phone card with the purchase of a backpack. Russell said Office Max, the stationery and office supply chain based Shaker Heights, Ohio, and some catalog houses ran this offer in their fall school-supply program.

In a chainwide back-to-school promotion, Albertson's featured a double card pack combining a 30-minute and 10-minute card for the price of one 30-minute card, which Davis of Talk 'N Toss described as extremely successful for the chain.

Thanksgiving & Christmas

In an effort to build higher fourth-quarter impulse sales for its private-label prepaid card, Giant Eagle, Pittsburgh, plans to market a holiday line of die-cut snowflake and Christmas-tree ornament phone cards.

The chain will display the stocking-stuffer cards near checkout aisles, next to its regular prepaid phone cards. The holiday phone-card mix carries suggested retail prices of $3.50 to $4.99 for a 15-minute stockkeeping unit, and $7.50 to $9.99 for a 30-minute version, said Borocz of MCI, Giant Eagle's phone-card source.

Other Tie-In Events

Prepaid phone cards at Ralphs Grocery Co., Compton, Calif., feature Richie Hearn, an up-and-comer on the Championship Auto Racing Team circuit, in the $5-, $10- and $25 price-point range.

"Ralphs has recognized that auto racing is one of the fastest growing sports worldwide. And although auto racing has been primarily a male sport, it's gained a broad audience among both males and females," said SmarTalk's Russell.

"Our prepaid cards are very visibly displayed near checkstands and pretty much right there as you're waiting to check out," said Terry O'Neill, manager of corporate communications for Ralphs and its Food 4 Less Warehouse Stores division.

Ralph's talks up its exclusive Richie Hearn cards with newspaper ads, posters placed throughout the store, signs at checkstands and overhead displays. Display materials vary depending on how much the chain promotes phone cards at different times, O'Neill added. In a bid to pump up phone-card volume this summer, Tops ran a "Men In Black" phone-card promotion timed to coincide with the movie's July release. The chain featured a 15-minute card, plus a bonus 5-minute card, at $5.99, according to DeSmith of Frontier Communications.