For supermarkets, continuities provide a competitive edge against mass merchants and increasingly are being used as traffic-building promotions.
"With competition out there from Wal-Mart, club stores and Walgreen, which all carry groceries, you must find ways to bring the consumer back into the grocery stores," said Lynn Burnett, general merchandise merchandiser at Supervalu's Great Lakes division, Pleasant Prairie, Wis. "This makes continuities more important than ever."
The majority of continuities fall into one of two categories: those designed to generate a profit or those meant to increase store traffic. For-profit continuity margins run about 20% in slower-turning categories such as compact discs and cassettes, glassware and books, but in the high 20% range for faster moving segments, such as towels and cookware, said general merchandise executives polled by SN. Burnett said Supervalu runs continuities for profit and at cost, with positive sales results from each format. The type of promotion depends on the item. Towels are highly competitive, so they need to carry very low retails, and should be run at cost, Burnett said.
Supervalu's 120-unit Great Lakes division usually runs 12-to 16-week-long promotions in January and September for flatware, personal care appliances and Walt Disney children's books.
Though its book and flatware promotions, which offer retails under $10, are highly successful, higher-priced campaigns featuring small kitchen and personal care appliances aren't received as well, Burnett said.
"Going over [$10] is usually taboo for a grocery store," she said. "Unless a small appliance continuity is priced below $10, you're risking not selling a lot." On the other hand, flatware can run at a profit since the category isn't usually priced very low by other retailers, she added.
Promotions at Fleming Cos. and Scrivner, Oklahoma City, which Fleming acquired last year, usually feature dinnerware and soft goods. Last year, about 20% of the 69 continuities featured at Fleming and Scrivner were designed to build traffic.
This year, Fleming and Scrivner will feature nearly 100 promotions, about one third of which will be traffic builders, according to Doug Falck, manager of promotional services at Qualities Cos., a division of Fleming Cos. that plans continuities for all Fleming and Scrivner retailers. "We'll be doing more porcelain-on-steel cookware in green, creams and off-whites at price points from $1.99 to $29.95," Falck said. These aggressive types of continuities are a cost-efficient way to create sales, traffic and customer loyalty, Falck said. "They are the easiest way to increase sales and get your existing customers to give you a little bit bigger share of their food budget," he said. In January, Jitney Jungle Stores of America, Jackson, Miss., launched a 12-week-long towel promotion -- its first traffic continuity in several years. It was designed to increase customer loyalty and traffic and to compete with Wal-Mart, according to Al Booth, assistant director of general merchandise and health and beauty care. The chain expects to run between three and four continuities this year, the same amount it ran in 1994, added Booth. "Our continuities are usually for profit in the 20% to 30% margin range and run without a minimum purchase requirement. But we're trying to offer customers general merchandise values that they would not usually find at our stores," said Booth. Price points aren't as critical as the perceived value of the featured item, Booth added. Customers usually will purchase an electric knife offered at a considerable savings over the regular price, he said, adding that the value depends on the type and style of merchandise offered.
Jitney Jungle usually has success with promotions that feature encyclopedias or dishware, provided that the dishware is offered in a popular pattern, he said. The chain conducts informal customer surveys on dishware pattern preferences and researches what's selling at department stores. "There is no magic price point to aim for in a continuity, except to try and give consumers the best deal," said Harold Nash, president of Encore Promotions, a promotion and marketing firm in Westbury, N.Y. "Prices can be constructed starting at $1.99 for a bath towel or free wash cloth, to $59.99 for AT&T cordless telephones, all tied to a minimum purchase. The same phone would sell at $99.99 at a discounter." Nash said continuities are important because they help provide repeat traffic.
"A continuity is basically a golden rubberband that compels the shopper to consciously or subconsciously return to the retailer to complete a stamp-saver card tied to a purchase, so that they qualify for an item at a certain price," he said. The success of a continuity, though, often hinges on the type and style of merchandise offered, some retailers said. Brand-name continuities carry built-in recognition and let customers know the product is a good value.
An Oneida brand flatware continuity "helped ensure the success of the promotion since consumers recognized the name and the quality it offered," said Burnett of Supervalu.
But shoppers are also receptive to unknown names with high department store quality, such as towel or cookware promotions, said Nash of Encore.
Brookshire Grocery Co., Tyler, Texas, will increase the number of continuities from five to six this year, since the promotions "develop a continuity of shopping," said Evan Nielsen, advertising manager. The chain gages its continuities on marketing conditions. At stores in competitive areas, it usually opts for traffic-building promotions run at cost to generate higher traffic counts, he said. But campaigns timed for a particular season or designed for a product that hasn't been promoted recently usually call for a for-profit approach, Nielsen explained.
"The first quarter, when we ran a Corning Visionware continuity at cost, is good for traffic-building promotions. Shoppers could purchase any of 10 items at a $3 savings off the regular $3.99 to $22.99 retails with a completed saver card with 10 saver stamps. A shopper received a stamp with each $5 in purchases. A&P, Montvale, N.J., intends to run seven continuities this year, the same amount as last year, according to Bill Vitulli, vice president of government and community relations. Vitulli said continuities usually have guaranteed success because the type of merchandise offered stays in demand.
"New families generate and items wear out, which has made continuities in towels, dishes or books continually successful," said Vitulli. Chains that have opted out of continuities for one reason or another are now mulling the prospect of launching one or more. Weis Markets, Sunbury, Pa., hasn't had a continuity for the past three to four years, but is now reviewing some continuity proposals.