Return Engagement for Continuities

Roll out the pallet with the pre-packed display and initial merchandise and ready the back-up stock. Continuities have returned to grocery aisles with a renewed purpose.

Traditionally part of many food retailers’ promotional tool kit, continuities appeared to go the way of S&H Green Stamps as the number of suppliers that sold them dried up along with the Association of Retail Marketing Services, the group that represented them. The International Housewares Association failed to revive the organization in 2007.

Since then rapid market changes, the suppressed economy and competition have left food retailers looking for ways to retain their loyal shoppers, boost their customer counts and increase their shopping baskets. Some have turned to the old-fashioned continuity, which somehow feels different and new again, as a traffic driver.

For those too young to remember, continuities are ongoing sales motivators that run over a period of time rewarding shoppers for their patronage with free or drastically reduced merchandise. United Supermarkets, Lubbock, Texas, is one such retailer who is again booking continuities. The chain is offering free or discounted eight-piece Grundig small kitchen appliances until March 6.

The ad message (http://bit.ly/xn89VT) for the exclusive Euro-style merchandise is simple — Shop, Save, Redeem.

The 22-week Grundig offer allows United shoppers to earn one bonus sticker for every $10 spent in stores. A shopper would need to accumulate 260 stickers for the contact grill, the most expensive item of the 8-piece selection that retails for $109.99. Or a shopper could pay $39.99 for the grill with 130 stickers. To earn 260 stickers a shopper would have to purchase $2,600 worth of food and other goods at United stores.

Wes Jackson, United’s chief merchandising officer, said the goal of such continuities is to sell more while meeting shoppers’ needs. “Even our best customers who shop every week may not be buying all their makeup or cosmetics or household needs like water softener salt for water softeners or air filters for heaters and air conditioners. That is where we saw the biggest sales lift in taxable grocery or in HBC/GM areas. Food had a significant lift too.”

Jackson described the sales effect from the continuity “almost like a feeding frenzy.”

This is the second such continuity the chain has run through TCC, Westport, Conn., a global continuity producer. Last year the retailer ran a 20-week Thomas professional-grade cookware program with 10 items in the set at retails that ranged from $39.99 to $99.99. The cookware program was structured like the Grundig promotion. (In the photo at right, United Regional VP Paul Evans gets management excited about the Thomas Cookware program.)

Jackson said United wanted to run a program that would be aspirational for all its shoppers and get them excited about cooking at home rather than going to restaurants.

Such promotions require a heavy up-front investment from retailers and before United bought into the cookware program it tested the goods among a small sampling of people and its corporate chef, who rated it the best quality among other merchandise under consideration.

This program hit the mark in achieving United’s goals, said Jackson. The retailer saw its biggest sales lift come from its best shoppers — those who spend $100 or more each week. Other shoppers, characterized as cherry pickers, who spend $50 each week, and opportunity shoppers, who spend $50-$100 each week, also increased their shopping baskets and often moved up to a different level of spending.

Jackson said TCC stood out from others because of the data analysis and reporting the company provided. “There was a lot of analytics and reporting so we could have a good idea of what we could expect from the program,” he said.

United wound up giving away $4.5 million in free merchandise, but the sales lift produced by the promotion more than offset the cost of the giveaway merchandise, according to Jackson.

“The best news of all is we held onto the sales lift all year. Did we do other things to hold the momentum? Yes, but this promotion helped us get the momentum,” he stated.

United built in 15% to 20% in safety stock so it wouldn’t run out of product. It sent 10% of unopened stock back after the promotion. Most continuity suppliers take back unopened cases of unsold stock.

Another regional chain, Big Y Foods, Springfield, Mass., is running a continuity of free environment-friendly cookware, valued at $185.95 for an eight-piece Ecolution set under the Symphony line.

The continuity is structured like those at United but instead of awarding bonus stickers, Big Y is tying the offer to its loyalty cards and coin rewards program. Shoppers need to earn 300 points through their purchases to acquire the free set. Points are accumulated through the Express Savings Club or Silver Savings Club cards. One point is earned for every $10 spent on a single transaction. The set can also be obtained for $39.99 with 150 points or $89.99 with 75 points.

Items can also be purchased individually with Big Y rewards silver and gold coins.

The brand from Epoca, Boca Raton, Fla., is deemed a healthy cooking line with a Hydrolon PFOA-free non-stick coating, which employs a new water-based application system, marketed exclusively by Ecolution.

The giveaway promotion, which began Jan. 26, runs through May 16.

Loyalty Enhancer

Such promotions are viewed as achieving a new level of continuity, although some say it is only at the beginning of the loyalty curve.

Jim Zimring, who was president of Kane Industries, an importer that sold many grocery continuities over the years and who is now a financial and Internet-marketing consultant, based in Tarzana, Calif., said United’s continuity deviates from the traditional four-to-12-week in-and-out traffic builders he used to run.

“This takes it to another level. By running a longer continuity, you are building continuity and loyalty over months. If you really want the pressure cooker and it’s a $129, you can get it free just by going back [to the store]. It’s the same as getting miles when you fly United. If you don’t fly United, you’re not going to get the free trip to Mazatlan,” Zimring explained.

He also pointed out that giveaway merchandise like Grundig is different and not what supermarkets sell.

“The difficult economic times over the last few years have caused slower sales of our for profit endcap promotions. It has created a large shift back to true loyalty promotions,” said Norton Smith, vice president of Heritage Mint, a long-time continuity supplier based in Scottsdale, Ariz.

Recent Heritage Mint programs have been run at Brookshire Bros with Lock & Lock plastic food storage and with Duncan Hines bakeware at Value Merchandisers and W. Lee Flowers retailers.

“Our most successful programs have gone from profit-producing endcaps to total store events that drive sales in all aisles of the grocery store,” said Smith.

Don Meyer, president of Allen & Barbour, another long-time continuity supplier in Vestavia, Ala., pointed to a new level of executives in the grocery business who are discovering continuities for the first time. “They are possibly finding out this is new and a different technique even though it is 60 years or more old.”

He believes continuities play a small part in the overall grand scheme of loyalty marketing. Many of Allen & Barbour’s continuities that feature brand names like Cuisinart are tied to the retailers’ loyalty cards in registering points based on their store purchases.

Brian Ross, president of Precima, Toronto, which is a consulting company that advises companies on shopper-centric strategies by applying analytics and technology, views the continuity as a short-term tactic that can be powerful but not sustaining.

“Our view is that the loyalty continuity program is the starting point of loyalty and not the end state. It really is about designing a program which creates a new platform to gauge and understand customers and offer them something in addition to the retailer’s value proposition to drive increased sales through greater spending and greater retention,” he said.

United’s Jackson concurred. “I think they build some loyalty but it goes away over time. The consumer will look at you but you still must be engaged in that consumer’s needs.”

Dan Raftery, Raftery Resource Network, Antiock, Ill., who is a researcher and consultant for the housewares industry, said the industry, including continuities, is poised for growth this year.

He expects strong orders, and booking of real estate for continuities, to be up, having just returned from Ambiente in Frankfurt, Germany, and going into the International Home Housewares Show, March 10-13, in Chicago.

“Things are looking up. Inventories have been skinnied up for two years. Most of the inventory has been flushed through the system. Now we’re starting to see strong orders from manufacturers to retailers. Ambiente, a precursor to IHA, was upbeat and sold out with attendance up over last year’s record attendance,” he said.

Kitchen, cleaning and storage products are all expected to pick up this year, he noted.

When it comes to continuities, design and colors are important. “When in tough times, people tend to not spend money outside of the house, but they might upgrade or change their tableware because they plan to stay home more. If the offer is exciting, edgy, cool enough or unique enough, people will spend money to spiff up their house. These continuities are a perfect opportunity to do that without the retailer having to do a whole planogram reset in a category.”