Savvy independent retailers are using frequent-shopper programs to both target loyal customers and to compete against big chains.
Quick to gather frequent-shopper information and quick to react to it, some aggressive independents are finding they can drill down into the data and develop new marketing plans as fast, if not faster, than the competition, and best the large chains at serving customers.
To battle competition in its area, Lees Supermarket, Westport, Mass., is using frequent-shopper data to develop different versions of a mailing that targets various age groups based on their purchases in certain departments.
Schultz Sav-O Stores, Sheboygan, Wis., comprised of 85 independent and corporate-owned stores operating under the Piggly Wiggly banner, is giving incentives to top customers to increase purchases in specific departments of the store.
"Because of the success rate we've had from customer sign-ups and the transactional quantity dollar volume we're doing with the card, we feel that we are definitely doing better than the competition, which includes the chains," said Mike Houser, senior vice president of marketing for Schultz Sav-O. "We can act and react faster to the database information and also create programs that drive sales."
Brian Woolf, president of the Retail Strategy Center, Greenville, S.C., called card marketing "the revenge" of the independent.
"This is the great equalizer for the independents," Woolf said. "My observation around the world has been that those companies doing the best with card marketing have under 30 stores, though there are some outstanding exceptions."
Well-executed frequent-shopper programs can give independents a competitive edge -- even when competing chains also employ customer-loyalty programs.
Mary Lee Hardin, owner of five Piggly Wiggly Stores in Gadsden, Ala., said that despite the fact that Food World, owned by Bruno's, Birmingham, Ala., started a frequent-shopper program five months before she did, Piggly Wiggly still offers better savings in many cases.
"Two months before Food World launched their frequent-shopper program, it appeared their prices were higher," Hardin said. "When the program got going, some of their savings were less than 20 cents on items. We don't offer any savings that are less than that on any item. In our opinion, the customer probably doesn't perceive a value unless it's 20 cents or more."
Piggly Wiggly has signed up more than 56,000 members since launching the program last September. This month, it will be analyzing data to determine the exact percentage of sales captured by the card.
Albert Lees Sr., chairman and chief executive officer of Lees Supermarket, said the company has a very aggressive advertising and promotional campaign starting this month to compete with another retailer in the area who has a very active card program.
While Lees would not elaborate on all of the retailer's specific loyalty-rewards programs, he did say one of its plans will involve special pricing discounts to groups of people who fall into a particular category. For example, a customer who may not be a large spender in the supermarket, but is a good wine customer.
Using frequent-shopper data, Lees broke out its customer base into people 20 to 35 years old, 36 to 50, 51 to 65, and over 65, to study which age group gives the store the best average sale; what each age group buys in each department; and what their top items are.
"What I'm going to have when I get through is a profile of my best customers in each age group and what they buy so I can market to that age group," Lees said. "This will guide us as to what to advertise."
To this end, Al's Almanack, a biweekly newspaper with recipes, articles and store advertising sent only to the top 40% of Lees' customers, will be available in different versions, depending on customer purchases and age group. The new, multiple-version mailing will go out sometime in the fall.
Schultz Sav-O offers a combination of incentives for its frequent-shopper cardholders. Its frequent-shopper program has been in place for 2.5 years.
Schultz Sav-O is also targeting its top customers to increase their purchases in certain departments of the store.
"If we have a store where the meat department is not performing as well as the rest of the departments, we can do incentives to certain customers to increase their meat purchases," Houser said. "This could also be done in the produce, deli, bakery or any other department."
Hardin's Piggly Wiggly stores will be running their first turkey promotion tied to its "Pig Power" frequent-shopper card in November. Customers will earn points for purchases and be able to redeem them for a free turkey. Higher points may earn customers an additional item, such as cornbread dressing.
This past summer, the retailer ran a 63rd Anniversary sale, which was a four-week promotion. Customers who showed their frequent-shopper card were able to purchase certain items at 63 cents, including a half-gallon of milk and 2-liter bottles of Pepsi and Coca-Cola.
Piggly Wiggly also sent out gold VIP stickers to its top 200 customers at each store. Customers put the sticker on the back of the card. Whenever the cashier sees the sticker, he or she activates a silent paging system to alert the manager to come up to the register, greet the customer, bag the groceries and take them to the car.
Green Hills Farms, Syracuse, N.Y., which has issued 25,000 frequent-shopper cards and tracks data on more than 13,000 households, also celebrated its 63rd anniversary and ran different events around its card.
"In the month of June we ran a sweepstakes for our customers, and each week we had a $100 gift certificate winner," said Gary Hawkins, CEO. "The grand prize, open to any cardholder who shopped during the month of June, was a year's supply of free groceries. The customer received an [electronic] entry each time the card was used."
Green Hill Farms is also expanding its card partners, which now include a golf course, a florist and a cruise line. Partner companies offer discounts to people who have the Green Hills Farms frequent-shopper card.
The retailer has also run frequent-shopper card promotions with local schools and churches. In these programs, once a cardholder signs up, the retailer rebates 1% of purchases back to the school or church of their choice.
During April, May and June, for example, 1,000 customers signed up for the school rebate program. The retailer is currently running the church rebate program for the third year.
Marty Phelan, director of merchandising at Tom's Food Markets, Traverse City, Mich., said the company recently switched all of its advertising in nonperishables, such as grocery, dairy and frozens, to 100% card-based. As a result, customers will now have to show their card to get discounts on items in these areas. Tom's also issued new frequent-shopper cards with key tags so that it's easy for customers to use the card.
