STORE WIDE WEB

Although it may have taken as long as a decade, many retailers are well out of the starting gate when it comes to Internet marketing and e-commerce.

Supermarkets, slow at the start, are quickly catching up to others and realize online marketing integrated with their overall business strategy is essential to further growing their business and staying competitive.

Both large food chains and independent grocery retailers are busy revamping their websites with bells and whistles such as Flash technology; multiple pages of new content; sophisticated shopping-list management with in-aisle item designations; targeted sales offers, sometimes delivered through RSS feeds; weekly circulars that are easy to navigate and integrate into the shopping list; and recipe offerings.

Blogs, podcasts and personalization are being tested but haven't become de rigueur yet on most supermarket websites.

Meanwhile, more grocery retailers — not wanting to make the investment in full-blown online grocery with delivery service — are adding partial online ordering to their Web services, whether it be specialty products, deli ordering or online grocery orders with pickup at the stores.

John Hauptman, partner, Willard Bishop, Barrington, Ill., says website marketing is critical to supermarkets' marketing mix. “Many [supermarkets] have been slow to leverage the power of their websites, but that is changing quickly today. All major operators understand the need for strong and robust websites that deliver something special, personalized offers, content or just a place to solicit shopper feedback,” Hauptman said.

All of this is made possible thanks to the penetration of the Internet into everyone's everyday lives over the past decade. Whole Foods' chief executive officer, John Mackey, underscored how pervasive and powerful the Internet has become in people's lives when he was caught posting anonymous opinions favorable to Whole Foods on a financial message board. As a result, Mackey put his own blog temporarily on hold at Whole Foods' website, which has become a popular way for the natural food retailer to connect to its customers.

Advances in technology have made it possible for retailers to offer more powerful and fully integrated websites and consumers to have speedy and easy connectivity through broadband. “Multiple electronic touch points are converging with the Web, including cell-phone texting, email and iPhone Web connectivity,” noted Robert Hemphill, president, Webstop.com, a Tarpon Springs, Fla.-based company that specializes in grocery website services.

SPARTAN STORES

Hemphill is currently working with Spartan Stores, Grand Rapids, Mich., on revamping and managing its retail websites. D&W Fresh Market is the latest iteration for Spartan, featuring high-quality scrolling graphics on the home page that can be quickly flipped through to entice shoppers with food ideas. Last week's home page featured “Tired of … Turkey?” tabs and offered seafood or a holiday pot roast as alternatives, as well as a “Gift Card” tab for a selection of 25 gift cards from popular restaurants and stores. The home page also noted the arrival of Beaujolais Nouveau, free diabetes tests, recipes using leftover wine, a recipe for Bourbon Ribeye and a consumer survey asking about the importance of locally grown produce.

The home page is the retailer's jumping-off point, said Hemphill. It's got to be appealing, and it has to work on all shoppers' computers and browsers.

Spartan, which could not be reached for comment, also wanted to develop a customized page for a pet photo contest, where consumers could go to any one of its five retail websites to enter with a photo of their pet that could be uploaded to the site. Consumers registered online and then voted for the pet of their choice. Pets scoring the most votes won awards. “It generated excitement and brought a lot of people to Spartan websites. They had to register, so we captured their email address. We know who they are and can communicate with them on email campaigns, which is a powerful way to brand and communicate,” Hemphill explained.

MEIJER'S RELAUNCH

Meijer, also based in Grand Rapids, relaunched its website this fall with an e-commerce component of 30,000 general merchandise products. The website, previously updated four years ago, also has online specialty food ordering. In the latest relaunch, Meijer boosted its e-commerce team from six to 40 people and hired Fry Inc., a website and e-commerce developer, based in Ann Arbor, Mich., to redesign and get the site up in nine months. Fry is also hosting the site and will provide ongoing services and enhancements.

The site features AJAX and Flash technology that gives consumers more information at their fingertips with fewer clicks, said Dawn Bronkema, Meijer's director of e-commerce. It includes a new order management system, a customer contact center application and a supplier-direct distribution network created by Pinnacle Rock Associates, a Fry subsidiary.

Meijer's home pages have rotating motion graphics on the top of the page, similar to D&W's website. In this case, the graphics feature Kid-Powered Cruisers, KidKraft toys and furniture and Meijer Gift Cards. What is deemed a “cool” or “wow” feature by industry observers is the “Fun and Easy GiftMatcher,” located at the top left of the page. Here, using motion graphics, Meijer rotates 10 personality types that shoppers can click on for gift suggestions. They are: the Home Body, Teens, the Gourmet, the Fitness Buff, Pet Lovers, the Kids, the Whole Family, the Person with Everything, the Gamer and the Gadget Guru. The website is also counting down to Christmas. It offers free shipping on orders over $100, a free text messaging service, a new photo service and many general merchandise items on sale at 10% to 30% off. The music, movies and games section also features “trailer” information that the shopper can view before purchasing a product.

Another innovative feature is a persistent shopping cart that can be viewed at all times without leaving the page. Product previews and recently viewed products remain in view without shoppers having to load a new page.

“Consumers want to be able to go to the store and website and have the same experience,” said Bronkema. “They want the shopping experience to be truly cross-channel.”

She said the revamp was done to expand the general merchandise selection beyond what Meijer offers shoppers in its stores and to expand the information content online so shoppers can better research and choose the right products. Meijer plans to add more food content in phase two of its website development next year, but has no immediate plans to offer online grocery shopping.

Bronkema declined to specify how much Meijer is investing in the revamp or the dollar amount of sales generated on the new site so far. However, “because we waited to build an e-commerce site, we were able to take advantage of newer technologies that were not as expensive as they were four years ago,” she noted.

D'AGOSTINO'S GOAL

D'Agostino Supermarkets also overhauled its website this year, hiring MyWebGrocer.com, Colchester, Vt. to revamp and operate the site. The retailer, based in Larchmont, N.Y., has offered an online shopping service for the past seven years.

Anderson Chung, D'Agostino's director of marketing, said this is either the company's fourth or fifth redesign since the website was launched in 2000. “Our goal was, and still is, to serve our customers in the most relevant manner possible. We know that residents of Manhattan and Westchester are time-starved, and our online shopping service can help them have more time for other things than shopping for groceries,” he said.

Chung declined to reveal online sales figures. Since the relaunch, he said, online weekly sales have doubled and are expected to triple by early next year. Still, online shopping represents less than 5% of D'Agostino's total sales revenue.

Rich Tarrant, CEO of MyWebGrocer.com, said online grocery sales are growing. “Some retailers are doing more than 10% of their sales online, up from five years ago.” Online grocery service is one way to build loyalty, he explained, because the shopper begins building purchasing history through the shopping list and placing orders online. The process becomes quick and easy. “It is too easy. It's convenient and saves time,” he said. “The consumer isn't going to get enticed by the buy-one, get-one-free from the competitor down the street. That is not why people are shopping this way.”

Still, saving money is important to consumers, since their No. 1 destination on a supermarket website is the weekly sales circular, according to those that track traffic. Circulars are integrated into other components on the website, such as recipes and shopping lists, making it easy for shoppers to build their shopping lists and save at the same time.

Curt Lund, chief marketing officer, Grocery Shopping Network, Minneapolis, which sells software to companies such as Ukrop's, Save Mart, Pathmark and Giant Food Stores of Carlisle, Pa., said shoppers are looking for items that are relevant to them, and then they look for price incentives on those items or specific recipes that include the items. Advanced technology has allowed GSN to pull components of the online shopping experience together so that with a few clicks shoppers can quickly build their shopping lists from the circulars, coupon offers and even information on their dietary needs.

Lund said Ukrop's has taken it to the next level: personalizing the experience by integrating loyalty card data. “The system can granularly select just the items you are looking for when you allow the engine to go to work and map your shopping habits based upon the loyalty card data,” Lund said, adding that the process is highly accurate.

UNITED SUPERMARKETS

Eddie Owens, director of communications, United Supermarkets, Lubbock, Texas, worked on a redesign of the company's website in 2005. United is now in another phase of enhancing its site and has hired adplex of Houston to apply its software to its virtual store. “It gave us a lot more interactivity and allowed visitors to the website to do a lot more things, and provides online video and expanded our recipe offers,” said Owens. “Shoppers can better manage their shopping lists.” The ultimate goal is for the company to be able to drill down to one-on-one marketing, he added. United plans to complete the next generation of its website next year.

“It is not where we want it to be yet. We'd like more interactivity and to be much better able to use it as a vehicle for target marketing,” Owens stated.

In addition to the virtual store upgrade, United added a career component on its home page in an effort to recruit employees for two new stores opening early next year in the Dallas-Fort Worth metroplex area.

FOOD LION EVOLVES

According to Kimberly Blackburn, spokeswoman for Food Lion, Salisbury, N.C., the chain is upgrading and enhancing its website by increasing the functionality, improving the content, upgrading the user interface and refining the design. Adplex of Houston is also powering Food Lion's virtual store. Besides having integrated capabilities in ads, specials, shopping lists, recipes and ingredients, shoppers can also view streaming videos focusing on meal and party preparation. “Uniquely, Food Lion's recipes not only have nutrition information, but they are scalable from two to 12 people, which makes menu planning extremely convenient,” said Blackburn.

Food Lion's strategy is to use the website to improve the lives of its customers by making their shopping, food preparation and health choices more convenient, relevant and fulfilling. “Our goal is to engage our customers in an interactive, two-way communication by personalizing our customers' online experience and making it more relevant to their everyday needs. In the process, we strive to build customer advocacy and loyalty and drive increased sales and market share.”

While today's retail websites are dynamic and replete with changing information, interactivity and real-time updating, there appears to be no finish line in sight when it comes to the potential of online marketing.

“Think about the pro-gress, penetration and usage we've seen in the last 10 years. In the next decade, there will be a huge percentage of the population that will shop online,” said Tarrant of MyWebGrocer. He points to the next generation, Millennials, as being wired and the most digitally literate. “All those bred on the Internet, who are out of college and starting to have kids, they don't want to spend time trudging through the supermarket.”

“The way technology architecture is, there is unlimited growth. The ability to layer on top of this goes beyond food. The next step is to cater to lifestyle and the wants of an individual or household. The idea is to have all content and make it immediately available so the shopping experience is as fast and hassle-free as it can be, and give consumers the greatest amount of savings,” said Lund in regard to where he thinks Internet marketing will be in five years.

“Blog technology is just beginning,” said Hemphill of Webstop.com. “This will expand greatly on successful websites. The best will emphasize information value in areas directly related to food and grocery products.”

He also predicts that soon consumers will have personalized grocery website home pages, personalized offers, real-time point balances, status, prior history of contest entries, club memberships, community programs and more.

Hauptman of Willard Bishop says websites used as fan clubs may be the next step for food retailers. This is illustrated by two sites — WD40 and Chicken of the Sea — designed by Nuffer, Smith, Tucker Inc., a San Diego public relations firm. Hauptman likened the experience to the 20th century water cooler, where like-minded people can gather to exchange information about a product and where manufacturers can learn from consumers. “It is a robust community of information and ideas,” Hauptman said. “It offers two-way communication and can inform about a product ahead of time and be used as a test bed. This may have strong applications for retailers.”

Bronkema of Meijer expects to see expanded product selection and quicker ship times for Meijer's site over the next five years. “What Wal-Mart is doing with order online and pick up in-store has some advantages and we are looking at that. I think grocery is still going to be a challenge for anyone to do it logistically and reliably for customers. You start to see smaller grocery delivery initiatives accepted on a wider basis than you are today, “ she added.

Blackburn said Food Lion is driving toward personalization, which will enable Food Lion to deliver personalized fliers, customized offers and product purchase reminders based on historical purchase patterns. For example, if a customer regularly purchases laundry detergent every eight weeks, Food Lion can deliver a special offer to this customer in week seven for $2 off the next purchase of laundry detergent. “The benefit is as much a reminder as it is a value offering,” said Blackburn.

Suggestive selling will also be used based on historical data. For example, if a customer goes online and creates a shopping list with ground beef and hamburger buns, but no condiments, Food Lion might suggest ketchup, mustard or cheese, Blackburn said. “This helps put another product in the basket and helps drive sales,” she added.

Web Analysis of 15 Leading Food Retailing Websites
(FOR THIRD QUARTER ENDING SEPT. 30, 2007)

ComScore, which measures digital online activity through a panel of 2 million people, compiled the following traffic statistics for SN, analyzing the three-month period ending Sept. 30. Kroger, which saw a growth of 8% in year-over-year traffic, led the group with 2.3 million visits during the period. In terms of unique visitors — those who visited at least once — nine retailers saw an increase in traffic with sites such as Trader Joe's, up 37%, and Winn-Dixie, up 156%. The majority of sites show a small degree of repeat visitation. The exception is Peapod, where visitors come back an average of once per month. Peapod also showed a tremendous number of pages per visit. Shoppers are clearly roaming the site as they would the aisles of a supermarket. Sites such as Safeway and Wegmans, which include recipes, store locators and wellness centers, also thrive in depth of visits. In the vast majority of cases, the top supermarkets have more or less maintained the same level in visitor time spent on-site as compared to third-quarter 2006. Of note, online grocer Peapod shows an average visit length of nearly 12 minutes. Clearly, people are moving through the site at a fairly rapid rate when juxtaposing this against the average number of pages seen.

Grocery Website Historical Trends

Supermarkets have come a long way since the early days of utilizing the World Wide Web to sell products and brand their stores. Advanced technology available to both consumers and retailers set the infrastructure for food retailers to have a much more appealing and useful website in place, filled with information that can build brand loyalty and drive consumers into stores. Here is how food retailing websites have evolved over the last decade.

Source of Traffic

Many of the top supermarkets rely on brand awareness to drive traffic to their sites. Roughly half of all traffic to Kroger, Safeway and Peapod comes from bookmarks or people typing in the URL referred to as organic search. For smaller players like Whole Foods, the majority of traffic is driven by unpaid search engine optimization, referred to as natural search.