Supermarket operators are energizing their marketing by pitching the whole store -- not just its prices.
The industry's longtime promotional medium, the weekly circular, isn't carrying all of its message, according to retail and wholesale advertising professionals. Today's savvy consumer, inundated with retail formats and sales hooks, is paying less attention to and is less swayed by the hodgepodge of items and price specials crammed into the typical supermarket flier, they say.
So to stand out in the marketplace, many companies are shifting their focus to image advertising.
"We're seeing a lot more of this, marketing the store as a brand and building brand equity into the store," said Buddy Martensen, director of retail advertising services at Fleming Cos., Oklahoma City. "We're trying to get [retailers] focused on building unique selling propositions into their stores -- being famous for something."
Consequently, a rising number of companies are updating the format of their circular and some are funneling extra ad dollars into media with greater immediacy: television, radio, direct mail, in-store signs, billboards and the Internet.
"As supermarkets become more marketing savvy, they see the need to differentiate themselves and to take more control over their own destiny in trying to shape that image," said John Muckerman, advertising and marketing director at Dierbergs Markets, Chesterfield, Mo.
"It has to do with an evolution in marketing in the fact that [supermarkets] are seeing a need to be more than just a place to get groceries at a cheap price," he explained. "The supermarket has always kind of considered itself something different or special [in advertising], and I think there's been an awakening."
Industry ad executives contacted by SN cited several trends that are driving a reorientation toward image, or institutional, advertising:
· Category management and other Efficient Consumer Response efforts are slowing the flow of manufacturer ad dollars.
· Price is becoming less of a promotional hook as more supermarket chains adopt everyday low pricing. Also, consumers are more skeptical about items advertised as "specials."
· Sharp growth in premium private labels and store brands created the need for a company image-brand association. · Supermarkets are concentrating on adding and promoting value-added departments and services.
· Newspaper readership is down and TV and radio audiences are up, meaning that messages must be attention-grabbing and brief. Time-pressed consumers don't want to have to scour pages jammed with dozens of items to find what they need.
"What advertisers need to do is cut through the information clutter and creatively give the customer a benefit he or she can recognize within the first two seconds of seeing it and then have them hold on to that piece of information," said Jann McKellar, advertising manager at Spartan Stores, Grand Rapids, Mich.
"Whether it's reading a billboard, sitting 30 seconds to watch a commercial or opening up a direct-mail piece and looking at it, those first two seconds can make or break your message."
With manufacturers stingier about furnishing ad funds, retailers and wholesalers are being forced to be more creative and to forge an identity that sells itself, according to Fleming's Martensen. "We are now more advertisers and marketers than we are qualifiers," he said.
"There's been a roadblock, and in recent years it has been giving way," he explained. "For years, retailers used advertising as a revenue stream. Now EDLP has come into play. Marketing funds are different. No longer is it sufficient for a manufacturer to simply qualify on the basis of square inches in an ad. Now it has to be based on case movement. That shift is drying up this revenue stream. So suddenly retailers are starting to look a bit deeper and ask themselves, 'What does my advertising need to say?' "
For example, Martensen noted, many of Fleming's IGA retailers incorporate a theme called "Hometown Proud," through which they arrange or tie in to local events and promote how their stores cater to community needs. "IGA has done a good job of getting their retailers to rally around this corporate identity," he said.
Dierbergs bills itself as "The Food Experts," touting its fresh and value-added departments, array of customer services, wide selection and big stores -- "selling people on what's different and better about a Dierbergs store," Muckerman said.
"We have to be careful that we don't take it for granted that everyone automatically knows that Dierbergs will cook your seafood for you for free while you shop, or that we have pharmacies or that you can rent a video and get one free every Tuesday and Wednesday. Things of that nature we need to communicate to the people going through our stores," he said, noting that the chain has stepped up in-store and direct-mail advertising.
A campaign by Spartan, "Make Mealtime Easy," centers on convenient meal solutions with its Spartan-brand products and uses billboards, TV and radio spots, point-of-sale materials, recipe kiosks and weekly print ads. "Coupled with competitive pricing -- you don't have to have the lowest prices in town -- that's the type of message that stands out in a crowd," McKellar said.
"The challenge today is spending your energies on how to reach the potential customer that is not shopping your store," she explained. "For many years, retailers have spent huge amounts of time on their item and price advertising. Price still comes up as the No. 1 issue among consumers. However, I strongly urge our retailers to spend more time on how they can gain new customers and increase their purchases once they enter the store."
K-VA-T Food Stores, Grundy, Va., has been adding to the customer base of its Food City chain with a video that's direct-mailed to new residents in its trade area, said Richard Southerland, advertising director. The video takes viewers on a tour of a Food City store, and customers returning an enclosed card to the store get a $5 discount on their next grocery purchase.
"We get a lot of new customers with that," Southerland said. "The video is probably the most unusual [ad vehicle] that we have used." Other chains with store-tour videos for new shoppers include Family Fare Super Markets, Hudsonville, Mich., and Dierbergs.
Food City also has an identity campaign called FCLP, for Food City Low Prices, which trumpets its perimeter departments and competitive pricing. "We try to project an image," Southerland said. "It seems like the pendulum swings. You might have to push price for three to five years to keep a good price image going. Then when your quality image slips a little, you have to go back toward building that."
Some chains are trying to modify their image to broaden their appeal.
For example, Gooding's Supermarkets, an upscale chain based in Altamonte Springs, Fla., this year lowered 10,000 prices in a campaign that includes point-of-sale materials, indoor and outdoor banners, billboards, and radio and TV commercials (featuring Chairman Jonathan Gooding). Similarly, Delchamps Inc., Mobile, Ala., last year began an aggressive in-store sign and shelf-tag program, "The New Low Price Leader Overall," to combat a high-price image. Point-of-sale materials bear slogans like "When Pennies Count, You Can Count on Delchamps," "So Many Things For So Much Less" and "Lowest Prices On Items You Buy The Most."
To build familiarity, a multimedia attack -- especially greater use of electronic media -- has become more important than ever before, industry advertising officials say. "More supermarkets today have more of a marketing mix," Dierbergs' Muckerman said. "For years, so many supermarkets only had the weekly circular. The circular tends to be a better tool for pushing price. It's not quite as good for pushing other elements of a retailer's personality, though it could definitely be used in that way. TV and radio probably are better vehicles to portray an image. Print ads tend to be just price lists, in many cases."
Food City has turned increasingly to broadcast advertising, using its FCLP moniker as a tag line in commercials, Southerland said. "We're going a little more toward TV. You can reach more people. The newspaper still gets the lion's share, but it's changing," he explained. "It depends on what you're doing. To sell a specific product, it's the newspaper. To build the image, it's TV and radio."
Reaching today's fast-paced consumer requires more message outlets and greater ad frequency, Fleming's Martensen noted.
"Definitely, radio and TV are on the upswing. They've always been in the mix, but [retailers] are putting more of their print dollars into radio and TV," he said, adding that he's had more requests for radio jingles. Cable television is a mushrooming advertising medium for supermarkets, offering an affordable, effective alternative to broadcast media, industry ad professionals say. However, Fleming's Martensen noted that some channels often are skewed toward a niche market instead of a mass audience.
"We're trying to get retailers to see that advertising is an odds game, and the better odds are in a good media mix," he said.
Nelson Rodenmayer, advertising and marketing director at Winn-Dixie Stores' Midwest division, based in Louisville, Ky., also stressed the importance of a balanced media plan. "We constantly look at the mix between our print and electronic media," he said. "Electronic media [advertising] is one of the best ways to get new customers."
Radio has become a key vehicle at Weis Markets, Sunbury, Pa., which has revamped its advertising strategy. "In recent years, we did not do radio, but in the last year we have begun using radio extensively," said spokesman Dennis Curtin. "One of the reasons is that we know fewer people are reading newspapers these days. So to reach our customers and potential customers, we can't just rely on newspapers and some TV."
The chain also has enhanced its TV commercials, expanded its in-store savings guide and upgraded the look of its circular, which now features bolder type and full-color and contains fewer items.
"The different look in our TV ads is meant to convey the presentation in our newer stores and remodels," Curtin said. "It's more colorful. It's a tracking shot, partially animated, of one of our Super Buy sections. It's constantly moving and has graphics throughout. The second part shows what's on feature."
One way to catch consumer attention is to advertise through a lesser-used medium in your industry, Spartan's McKellar said, pointing to the successful "Make Mealtime Easy" billboards. "In using billboards, we wanted to be in a medium where people don't normally see us, hoping that even the presence would stand out in a crowd, let alone the message," McKellar said. "When you use any medium for an extended amount of time, you need to continually challenge yourself to stand out from a creativity standpoint and to raise the awareness of your message."
Outdoor advertising currently is a "hot" promotional avenue, according to Fleming's Martensen. "We're seeing more outdoor than ever before. Outdoor is an excellent reminder medium," he said, citing a billboard campaign by Fleming's Mega Market chain. "With consumers today, you have to be more intrusive with how you get to them."
The drive to make shoppers notice your message has fueled a surge in direct-mail advertising, according to industry ad executives.
"Regardless of whether [consumers] are reading the local papers, we know they're getting our circular in their homes," Dierbergs' Muckerman said. "So if they at least go through the mail, they're seeing that Dierbergs ad. What we put on the front page is what's going to have to do the job of getting them to read further."
With a direct line into shoppers' homes, the Internet is ushering in a new era of supermarket advertising, many industry observers say. Industry ad executives contacted by SN said they only were looking at setting up a home page, testing one or servicing a small number of users. Yet all agreed that the Internet eventually will become a key promotional vehicle and, therefore, warrants exploration.
"The real challenge is on the retailer to keep the home page fresh," Fleming's Martensen said. "So not only are you offering the consumer the weekly specials, but also they want to see shopping tips, recipe ideas and ideas on what to buy when they're in the store."
Cost continues to govern how many chains advertise. Rising paper and print production costs and broadcast airtime rates have made it tough for some companies to sustain a multimedia campaign, industry ad professionals say.
Big chains, with their hefty promotional budgets, often dictate the shape of advertising in a given market, said Lynda Trelut, vice president of advertising and marketing at Nob Hill Foods, Gilroy, Calif.
"That's how it's driven. It seems to me that, right now, it's whoever is spending the most money," she said, explaining that Safeway's aggressive promotion of its coupon book forced her chain to come out with one.
To help independents get an advertising foothold, the Mid-Atlantic Food Dealers Association, Baltimore, has developed a marketing service to provide affordable cable TV commercials and high-quality circulars that are personalized with the store logo.
The program, slated to start July 1, groups independents together in a 100-store "chain," through which they pay the association a flat fee per quarter -- $250 per store for a single-unit operator and $158 per store for a multistore operator -- for a monthly four-color circular; TV spots on such cable stations as ESPN, CNN, The Discovery Channel and Lifetime; and a monthly consumer sweepstakes.
"For that, they'll get an average of 15,000 circulars and 20 spots per store per quarter," said Denis Zegar, the association's president and chief executive officer and a former vice president of the National-American Wholesale Grocers' Association.
"We are attempting to make the independents competitive with the chains," Zegar explained. "A lot of independents don't have a lot of flash outside their stores but inside have beautiful stores. They feel this [program] will help attract people and get them past the front door."
Given today's multimedia age, industry ad professionals said their biggest challenge is matching the right message with the right medium for the targeted customers. "One needs to be more aware of all the media options," said Michael Garlich, Gooding's vice president of advertising. "I don't know that you necessarily have to be more intrusive, but you need to be more selective."
According to Spartan's McKellar, "Companies need to know what their objectives are and then find the best line of communication to meet those objectives. What I see often today is finding a medium and then trying to decide how to use it -- and that's backwards."