FRILLS, LURES AND OTHER COMPETITIVE GIMMICKS

Elliot Zwiebach

Supermarkets have used various marketing approaches to attract customers over the last 50 years. Among the earliest and most controversial were trading stamps and promotional games.

Stamps were among the industry's favorite marketing tools to draw customers through the 1950s and 1960s, with shoppers usually receiving one stamp for each 10 cents' worth of groceries purchased; stamps could be collected and redeemed for various gift items.

That practice made news in SN in 1953, when a "stamp war" broke out in Denver. Retailers offered double, triple and even quadruple stamps -- similar to coupon activity today -- with some companies willing to go as high as 10 stamps for every 10-cent purchase. SN called it "one of the most fantastic battles ever staged by food chains."

The battles ended when officials from five trading stamp companies ordered their chain customers to return to the basic redemption policy.

As consumers began learning that the cost of stamp programs affected grocery prices, retailers considered dropping stamps, although many were reluctant to make any quick moves -- reflected in an SN poll of retailers in major cities that year, who indicated that they needed more time to determine the long-range effect on sales if stamps were dropped.

A 1959 study by the U.S. Department of Agriculture indicated that prices at stamp-giving stores averaged 0.6% higher than non-stamp-giving stores, SN reported -- the kind of information that increased demands in some quarters for government regulation of the industry's pricing.

In 1967 the Federal Trade Commission launched a probe of promotional games, with the industry expecting the commission to seek legislation giving government the right to determine which forms of advertising and promotions were OK. Clarence G. Adamy, president of the National Association of Food Chains, said he saw no difference in principle between banning games and banning newspaper ads. "If the government can do one, it can do both," he said.

In 1968 President Johnson's Consumer Advisory Council came out swinging at retail giveaways and trading stamps, with Betty Furness, special assistant to the president for consumer affairs, saying retailers that offered stamps should be required to disclose what they paid for them so consumers could decide whether to accept the stamps or the price the retailer actually paid the stamp company, or neither one.

In 1969 the FTC said it would not prohibit games of chance at retail stores and gas stations but would set stricter regulations, including ruling that it was a deceptive practice for promoters or manufacturers of games to engage in advertising or other promotions that misrepresented a participant's chances of winning.

Manufacturer coupons have traditionally been a popular marketing tool, but even they proved controversial.

For example, Safeway said in 1954 it was losing money handling coupons and, in an effort to discourage manufacturers from issuing them, said it would redeem a manufacturer's coupon for any brand, not just the brand of the company that issued it. According to SN, "The plan offers to redeem any manufacturer's coupon with the products of his competitor provided the competitor agrees to pay the face value of the coupon, plus a 20% handling charge."

Safeway went a step further later that year when it initiated a program in which customers received cash for manufacturers' coupons, regardless of whether they purchased those products; the only requirement was that Safeway carry the couponed product and that the total refund did not exceed the customer's purchase.

That approach to couponing was short-lived, however, and by the late 1970s, some retailers began to double the value of manufacturer coupons as a competitive gimmick -- occasionally tripling and even quadrupling the coupons' face value to drive traffic.

Eventually retailers turned to frequent shopper, or loyalty, cards, which enabled them to reduce prices for so-called loyal customers when manufacturers cut their prices, without the need to increase the amount of the reduction as a competitive weapon.

Even stamps -- the original promotional vehicle -- are making a comeback, though with a modern twist: Instead of distributing actual trading stamps at the checkstand that consumers have to paste in a book before redeeming them for merchandise, S&H Greenstamps has been reborn as S&H Greenpoints, enabling consumers to accumulate "points" electronically, which can eventually be redeemed for premium merchandise.