ROUNDY'S ROUNDING UP SALES WITH FREQUENT SHOPPER DATA

MARC MILLSTEIN

PONTE VEDRA BEACH, Fla. -- Roundy's is using frequent shopper data in smart ways to build sales.

In one program, Roundy's harnessed its extensive bank of frequent shopper information to target a select group of customers who had stopped shopping in one store and lure them back with a series of direct mail offers.

The result: "We had a 21% rate of people who came back into the store, which is phenomenal, and they continued to shop with us," said Tom Wiesner, director of marketing at Roundy's, Pewaukee, Wis.

Wiesner spoke about Roundy's electronic marketing initiatives at the Global Electronic Marketing Conference here April 1 and 2. The event drew about 160 attendees and was sponsored by Retail Systems Consulting, Naples, Fla., and Grocery Manufacturers of America, Washington.

"We went into our [frequent shopper data base] and came up with a list of 900 people who had been among our best customers but haven't shopped with us for three months. We then sent each of them a card hand-addressed. If you get a card hand-written to you, you don't throw that out," Wiesner said.

The first wave of mailings contained a certificate for a free container of milk. Customers who failed to respond then received a second and, if necessary, a third mailing featuring additional offers, he said.

Roundy's is also having considerable success targeting

specific customers with an in-store kiosk system. The kiosks, now in place in 53 Pick 'n Save stores, generate a customized list of product discounts, based on customers' purchasing history, for shoppers using their electronic frequent shopper cards.

One key measure of the system's success has been the surging redemption rates, more than double the industry average for coupons, of the kiosk-generated offers. Wiesner stressed that the kiosks generate a shopping list of product offers, not actual paper coupons.

"I know we are over 5% now [in the offer redemption rate] and growing. We are real happy with those numbers. We did $414,000 in refunds in the month of December and that's also a pretty good measurement for us," he said.

Based on the success of the program thus far, Roundy's plans to roll out the kiosks to another 12 stores by Friday, and to seven non-Pick 'n Save units by May 24.

"Then we are looking at the other divisions, at taking [the kiosk program] and really rolling with it," Wiesner said.

Another aspect of the targeted marketing program that is meeting with considerable approval, especially from Roundy's point of view, is the movement away from relying on mass distributed freestanding insert coupon offers.

"I won't spend a lot of time talking about coupons. We all know FSI redemption rates are dropping. FSIs cost $6.5 billion to distribute, and only $3 billion of that gets to the consumer. It's an expensive way to run a program.

"Here's the killer stat. I'm not a rocket scientist but I can spot a trend here. In 1992, the redemption rate was 2.49%; in 1994 it was 2.02%, and today it is around 1.98%," Wiesner said.

"I'm a retailer and I'll tell you what. We don't like paper coupons. They are costly and they disturb our business. They are always featuring some item we didn't know about. Paper is hard to handle. We lose money on it," he added.

As far as Roundy's targeted marketing initiatives are concerned, Wiesner made clear the company's commitment to expanding the program even further.

"In 1995, we gave back to the consumers of Wisconsin over $10 million in discounts. That's $10 million in additional offers from the vendor community, because when we launched our frequent shopper system we left all our other programs running," Wiesner said.

"We have $6 million tied up in hardware and software, and that doesn't include labor. We want to make sure all the profits from our frequent shopper electronic marketing programs roll back into the programs and keep us on the leading edge.

"Once everyone gets frequent shopper, we could be on a level playing field with nothing special. We have to take it to the next plane. If anybody in the room says frequent shopper doesn't work, I differ with you," he added.