THE TARGET MARKET

COLE CORBIN

The number of retailers offering technology-based in-store marketing programs with the ability to strengthen relationships with their best customers continues to grow at a strong rate. Retailers are seeing some of these relationships flourish when they apply frequent-shopper and item-movement databases to other marketing initiatives.

Interactive kiosks, targeted sampling and in-store coupons distributed based on consumer profiles are a few of the ways retailers are trying to improve their rapport with customers through the use of collected data.

Another initiative being explored by one retailer is targeting specific promotions to customers through the use of an electronic device mounted on a shopping cart. The unit tracks where the customer is in the store, and features audio product announcements and discounts.

Retailers may not agree on the best way to implement these programs, but they do agree that in-store media programs are a good way to keep their most profitable customers loyal.

Within the past few years the use of frequent-shopper programs has been considered a dominant marketing strategy, and helped retailers create wealthy consumer-profile databases. The challenge retailers face, however, is putting this information to its best use.

Some retailers are expanding the breadth of frequent-shopper programs by applying their customer databases to other marketing strategies. One way retailers are putting their frequent-shopper databases to use is through the deployment of interactive kiosks.

Retailers opting to use interactive kiosks have the opportunity to electronically link the units with the front end, enabling retailers to provide customer-specific discounts and incentives through the units. The kiosks, which typically run on the same platform as the point-of-sale, can relay any customer activity directly to the POS, which electronically deducts discounts during checkout.

Kiosks that base offers on customer information and buying habits stored in the retailer's loyalty database are getting high marks. Laneco, Easton, Pa., a division of Supervalu, Minneapolis, uses up to six kiosks in its 16 stores.

When a customer swipes a frequent-shopper card through the kiosk, the unit recognizes the customer according to the profile in its database. The unit's multimedia screen then displays certain discounts that might interest that customer.

"For example, if they don't ever buy cigarettes, they will never be given an offer for them," said Bob Spelts, director of advertising for Supervalu. "It's based on their past behavior, but it's not exclusive to their past behavior."

The kiosk system is electronically connected to the retailer's POS system. The customer has 24 hours to receive the discount on any selected items, and all discounts are electronically deducted during checkout.

Spelts said that although this was not the first kiosk experiment in stores operated by Supervalu, this program seems to be getting the best results. "This is as close to a well-working kiosk system as I've ever seen," he said.

Though Supervalu is looking into the program for use in other stores, currently it has no plans to expand the operation, he said.

While kiosks can enhance a frequent-shopper program, the units can also pose problems. Besides taking up precious floor space or not functioning during peak shopping times, kiosks are sometimes viewed as an additional stop for time-starved customers, and intriguing to curious, rather than serious, users.

"Let's say a customer needs to stop by the store after work to buy dinner, however they want to get home," Spelts said. "What happens if there's a line [at the kiosk] or some adolescents are playing with it while their mother is shopping? Is that customer going to wait?"

These hurdles have generally been the bane of operating a perfect kiosk system within the stores, Spelts said.

Kiosks are not the only in-store media tool using the power of retailer databases. Some retailers are monitoring item movement at the POS in relation to specific promotions to provide offers for free samples and multiple-purchase incentives.

These offers are generated in the form of paper coupons, and delivered through in-store printing machines at the POS.

The coupon-printing machine is triggered when specific items featured in the promotion are scanned during checkout. For each qualifying item purchased, a coupon promoting the discount is printed.

Certified Grocers Midwest, Hodgkins, Ill., is partnering with a third-party company to provide its retailers a marketing program that prints out coupons for free samples at the POS. Customers can redeem the coupon within two weeks at the store where the coupon was issued.

"It encourages the consumer to return to the retailer where they got [the receipt for the free sample]," said a Certified executive who spoke on the basis of anonymity. He noted that these coupons have a 34% redemption rate at the stores offering the promotions.

Another version of customer-specific coupons printed at checkout are multiple-purchase incentives. These coupons entitle consumers to a discount -- typically up to $2 -- off their next purchase when they buy different featured products during one shopping trip.

Retailers also combine this marketing tool with themes based on store demographics, specific consumer needs and different holidays and events. Sheboygan, Wis.-based Schultz Sav-O Stores' 86 Piggly Wiggly stores have been issuing these types of machine-generated in-store coupons for six months.

"For example, we have stores in communities that have many Mexican-Americans living in the area," explained Michael Houser, executive vice president and director of marketing and merchandising for Schultz Sav-O. "In the future we could offer incentives around Cinco de Mayo."

In some instances, Piggly Wiggly supplements a coupon provided by the manufacturer with its own price-reduction offers to further attract customers.

"It has become an important part of our marketing strategy," said Houser. "We use it as an adjunct to an offer we might make regionally. It's a great way to get the customer back into the store."

One sophisticated technology that is gaining attention is a device mounted over a rear wheel of a shopping cart that tracks customers through the store. The device triggers an audio advertisement when the customer enters a specific aisle, according to a source familiar with the situation. The source noted the device reportedly recognizes each particular cart and how many times the cart has gone through a specific aisle.

Shaw's Supermarkets, East Bridgewater, Mass., is currently using this device as a loss-prevention method for its shopping carts at two stores, one in New Haven, Conn., and the other in Boston. The retailer is looking into expanding the functions of this device and using it as part of its marketing strategy, said Bernie Rogan, spokesman for Shaw's.

"It does have that capacity," Rogan said. "But we have not utilized it at this point in time."