SELLING SHORT

BARBARA MURRAY

Kmart pioneered short-duration sales 40 years ago with the BlueLight Special, a promotional tactic that defined the retailer's image and helped to generate impulse purchases by those customers already in the store.

Today's operators still use the volume-building tactic, but in a different way. In these times of fierce competition, three- or four-day sales have emerged as a key strategy for traditional supermarkets to beat the prices offered by the mass merchants and warehouse clubs, retailers and industry observers told SN.

"This market is huge for these sales," said Dixie Young, nonfoods supervisor for Tidyman's, Greenacres, Wash. Young, who also buys candy for the 21-store independent, said these short-term sales "have started to bring out the cherry picker, but you want to see if you can get them to switch."

Indeed, short sales aren't the primary vehicle used by retailers to foster store loyalty, but they do get consumers in the store who otherwise might not have stepped through the front door.

"It creates excitement, and draws customers who are not regular shoppers of the store. You hope to get them on a regular basis," said Rich Savner, spokesman for Pathmark Stores, Carteret, N.J.

Typically, the items on sale are high velocity and in key categories. It's common to run these sales at the end of the month when people are stretching their dollars, Savner said. Such sales could also be run during a slower period in the month "when you're trying to generate some excitement, whether it's companywide or in a certain targeted area," said Savner.

Such initiatives are not without risk. Retailers have to ensure vendor support, and make sure stock is plentiful. Similarly, executives have to be confident that a short-duration sale fits the image of the chain.

The most serious implication expressed by industry insiders is that frequent sales in one marketplace may train customers to wait for these events, eroding loyalty.

Nevertheless, "it's a way to generate promotional income, and you'll get more participation depending on what the items are," said Paul J. Kelly, principal in Silvermine Consulting Group, Westport, Conn. Purchase patterns vary at different times of the week, he said. Water, for example, tends to be bought toward the end of the week and during the weekend. Staples might move better earlier in the week.

"If [a retailer asked for] a reasonable promotional fee for a shorter period of time, I think a lot of manufacturers would be willing to consider it," Kelly said.

Heinen's, Warrensville Heights, Ohio, ran such sales 25 years ago, but stopped because of vendors' insistence that the retailer run a newspaper ad.

"We used to run a Monday-to-Wednesday ad, back when Wednesday was the food ad day, and our ad came out on Thursday. We ran the ad to promote business on our least busy days," said Tom Heinen, the independent's chief operating officer. "It ended up being driven more by making sure we qualified for manufacturers' allowances," he said. "You had to have a run-of-press ad to justify any funding. If we did an in-store special, they wouldn't pay."

Nobody has those kinds of requirements anymore, Kelly said, because everything is done with loyalty cards now. During a recent Pathmark promotion, for example, Nabisco products were 50% off -- essentially most of the cookie and cracker aisle -- as well as Breyer's ice cream, $1.99 for a half gallon. To get the discount, shoppers had to use their frequent shopper card.

Short-duration sale events are designed to create a sense of urgency, said Don Stuart, a partner in Cannondale Associates, Wilton, Conn. The firm has studied the concept of "expandable consumption," which looks at frequent shopper card data to determine how much more a customer might purchase because of a promotion, and then, to see if the sale lengthens or contracts the person's normal purchase cycle.

"If they purchased twice as much and came back a month later instead of their typical two-week cycle, the expansion was zero. If they purchased twice as much and came back in half the time, you've quadrupled it," he said.

An autumn visit to King Soopers stores in Colorado Springs and Monument, Colo., found a slight twist in a four-day sale in progress, themed "Tailgate Party Favorites." Here, private-label products were the sole focus: Big K carbonated soft drinks, Kroger tortilla chips, Private Selection Brownie Bite party trays, deli meats and cheeses, and Kroger "Ready to Grill" ground beef patties. Again, "Save with Card" football logos in ads told shoppers they had to use the frequent shopper card to get the deals, which included two-liter bottles of soda for 39 cents.

"There's so much margin on private label that you don't need the [vendor] funding," observed Kelly.

Brands also work. Tidyman's ran a 72-hour sale on Halloween candy, Oct. 9 through Oct. 11. Bags of brand-name candy were reduced in price, while a note on the retailer's Web site cautioned: "While supplies last. No rain checks."

Between Tidyman's timing (three weeks before the holiday) and the category (candy), Stuart noted the retailer probably had a winner. Tidyman's Young corroborated that.

"It was phenomenal," she said. Manufacturers' allowances do apply, and this year, Tidyman's wholesaler kicked in some funds as well, Young said. In the past, the candy sale ran for only two days, was advertised on television, and was held a week earlier. This year, there was no TV advertising, and the sale was extended a day. Volume was the same as for the previous year, Young said, adding that it overlapped by one day a 72-hour sale on baking ingredients that was also successful.

"I think they want to create a reason to buy and stock up now. I think it's a short-term thing to get the momentum back," Stuart said.

Even if three-day sales were around 20 years ago, for now, the concept is new and different, Stuart said, and can break through the clutter. Running a holiday candy sale like Tidyman's is very viable, he added. "It's always great if you can get two purchases for a holiday: an early one and the holiday one."

In the larger picture, though, Stuart said such sales potentially promote a trade-off between loyalty and value.

"Ultimately, if everyone goes on 12-hour sales, you will create a state of perpetual paranoia because consumers will either jump at the opportunity to maximize their value, or become immune to them," he said.