The turbulent economy took center stage this year as the inflated cost of living dictated everything from what consumers ate to where they shopped.
As Americans put down their restaurant forks and dusted off their cookbooks to make ends meet, supermarkets held their hands through the unfamiliar process by highlighting recipes with per-serving costs in the $2.50 to $4 range.
Retailers like Meijer, with the launch of its online Mealbox planning tool, also simplified shopping by helping consumers organize weekly menus, populate shopping lists and access discounts on the foods they planned to buy. Deals on complete meals also came in the form of digital coupons offered by Kroger and AOL's shortcuts.com.
Coupons made a comeback in 2008. In January, 25% of consumers polled by the Nielsen Co. reported using coupons to manage costs, up from 20% in June of the previous year. The growing interest in discounted offers inspired several new initiatives, including coupon widgets that can be embedded in personal Web pages and electronic coupons accessed via a cell phone.
Retailers also helped manage shoppers' hardships, and their own, by heavily promoting private labels. Grocers featured store brands in reduced-pricing programs, recipes and even games designed to incite trial.
Shoppers, in turn, changed their purchasing habits and spurred the pace of private-label growth beyond that of national brands at several retailers, including Wal-Mart and Safeway.
Grocers also aimed to drive margins by influencing purchasing decisions at the point of sale. Their efforts involved both shelf-tag and technology-based approaches.
Bashas' introduced new color-coded shelf tags to help shoppers identify savings throughout the store.
Wal-Mart used technology to begin customizing messages broadcast over its in-store television network. The messages can be customized for optimum results by store, screen and time of day.
Eating In
CONSUMERS PUT discretionary spending on the back burner in 2008 and headed for the budget-friendly shelter of their kitchens and dining rooms.
While some took advantage of retailer recipes touting low prices per serving, others sought the inexpensive convenience of frozens or planned their weekly menus around discounted items and private-label products. What consumers didn't do was mimic shopping behaviors of past recessionary periods.
Instead of turning toward ready-made meals, many relied on cooking from scratch. The trend was evidenced in volume increases of ingredients and meal components like flour, mayonnaise and stuffing mix, according to Information Resources Inc., Chicago.
Allrecipes.com also reported double-digit increases in visits to its recipe database vs. the previous year, as at-home chefs sought ways to make basics like spaghetti sauce, pie crust and French toast.
Shoppers also relied on the value and innovations offered within the frozen food section.
“In previous downturns, we saw a rise in convenience foods like prepared meals and frozen entrees, but this time around we're seeing a rise in things like frozen side dishes, frozen vegetables and frozen poultry,” Sheila McCusker, editor of IRI's Time and Trends report, told SN.
Meal-planning shoppers took cues from retailers that eliminated much of the guesswork with strategically crafted tools and discount programs.
In July, Meijer launched its Meijer Mealbox meal-planning website, which allows shoppers to plan a calendar of meals by choosing recipes. Once they've made their selections, ingredients are loaded into a shopping list, along with printable coupons relevant to the meal components.
Publix also began catering to at-home diners with its Essentials program, which focuses on seven discounted staple products. Promoted items have included a 5-pound bag of Publix white potatoes, “great for mashing,” $1.99; Publix whole chicken, 99 cents a pound; and Publix milk, 1 gallon, $3.49.
Deals on complete meals also emerged.
Kroger, in partnership with AOL's shortcuts.com, began pairing discounted meal components earlier this year.
Offers like $5.60 off “A Traditional Holiday Meal” can be automatically loaded onto a Kroger shopper's loyalty card during a visit to shortcuts.com. Offers are good either on single meal components, or on meal ingredients purchased collectively.
Retailers also began putting meal costs into context by touting different recipes' cost per serving. Chains like Wegmans dipped to the $2.50-per-serving range with its Cauliflower, Spinach & Chicken Gratin recipe, while Whole Foods Market endeavored to change its premium products/premium price image with meals that could be prepared for $4 per serving. The chain hosted a contest among its food bloggers for recipes that fit the bill. Finalists' ideas included recipes for Miso Bulgur Pilaf With Lemon-Ginger Tofu, Cincinnati Chili and Farro with Butternut Squash.
Competing channels also got in on the surge in at-home eating opportunities.
Although they offer higher-priced consumables, the convenience of drug stores played a huge part in shoppers' decisions to shop there when gas prices were through the roof. Dollar stores also built basket sizes during shoppers' fill-in trips by focusing on their consistency of brands, and cross-merchandsing simple meal solutions, such as pasta and sauce.
-- Julie Gallagher
Counting on Coupons
COUPONING DRASTICALLY changed in 2008 as manufacturers and retailers tested the waters with widgets, digital offers and new cell-phone technologies.
Widgets are data files that can be embedded into personalized Web pages, like those hosted by Facebook and iGoogle, and provide automatic content updates, including coupons.
Wakefern Food Corp.'s ShopRite banner launched a weekly circular widget that allows online users to see what products are on sale and connect to the store's Web page. The widget is available through a partnership with MyWebGrocer, Colchester, Vt., an e-commerce company.
Meijer, Grand Rapids, Mich., also has a widget for its Meijer Mealbox site, at mealbox.meijer.com. The widget automatically adds the newest recipes and coupons and keeps shopping lists current without requiring a return to the Mealbox site.
Along with widgets, 2008 was a big year for digital coupons as an array of retailers launched paperless Internet coupons that can be linked to loyalty cards.
Kroger launched several e-coupon programs throughout the year, including online catalogs from Unilever and Procter & Gamble, as well as a partnership with AOL's Shortcuts platform.
Most of the big national chains also started offering Upromise e-coupons — online coupons that link directly to loyalty cards for automatic college savings.
Kroger took the lead in mobile marketing by making coupons available via cell phones. The retailer partnered with mobile coupon service provider Cellfire to provide a free service that allows users to access exclusive coupons from their phone and link them to their loyalty card.
Retailers also stepped up coupon promotions in 2008.
Food Lion ran several online games in which all players received coupons for private-label and national-brand products. A Thanksgiving “Cranberry Cannon Game” involved shooting Food Lion-brand cranberry sauce at flying turkeys. Players collected points based on the number of turkeys they hit. Once they completed the game, players were offered coupons, such as $1 off Food Lion frozen vegetables.
Such efforts came at a time when U.S. consumer packaged goods manufacturers distributed 285 billion coupons in 2007, a 2.2% increase from 2006. For the first time since 1992, total CPG redemption volume in 2007 remained flat compared with the prior year, at 2.6 billion.
Since e-coupons are so new, distribution numbers are not yet available. But coupon processors recently added them to their databases.
Due to the growth of the digital coupon industry, the Association of Coupon Professionals, Des Plaines, Ill., launched a Digital Coupon Redemption Task Force. The goal of the council is to develop industry guidelines and best practices.
-- Carol Angrisani
Private Promos
AS DISCIPLINED SHOPPERS scaled back their purchases this year, retailers put their marketing muscle behind store brands to help beef up profits.
Their strategy gave way to unprecedented results.
Although private-label products had enjoyed five consecutive years of sales growth, previous sales bumps were attributed to higher prices and flat or falling volume. During the summer months, corporate-brand unit sales also began to grow, and in some cases this growth outpaced that of national brands.
Much of these lines' success is attributed to retailers putting store brands front and center.
Food Lion helped build awareness of its seven private-label lines this year by getting interactive. Its online “Matching Game” encouraged shoppers to learn the names of its corporate brands by clicking on cards until all matches were revealed. Winners received a printable $1-off coupon for a private-label product.
Associated Food Stores, Salt Lake City, also turned to the Web. To help raise excitement and incite trial of its Western Family brand among consumers ages 25 to 35, Associated began hosting 13 weekly “webisodes” online.
Each of the one- to two-minute sitcom-style episodes featured a family named the Westerns, and a different private-label product. After viewing each episode, visitors could access a coupon good for one free store-brand item.
Grocers also pit store brands against their national-brand counterparts.
More than 10,000 Wegmans shoppers participated in blind taste tests of the retailer's corporate and national-brand offerings.
To encourage anonymity, products were identified with only a number and not a name.
“From those test results, we identified those Wegmans brand items clearly preferred by testers and in the future they'll be identified on the shelf with ‘Great Taste Wins’ signs,” said Mary Ellen Burris, Wegmans' senior vice president of consumer affairs, in her column.
Wegmans also promoted its private labels as ingredients in meals such as Pan Seared Pork Tenderloin that could be prepared for as little as $3 per serving, and highlighted their reduced prices.
Dozens of Wegmans brands were the beneficiaries of price reductions made in anticipation of future savings from suppliers. According to Wegmans, the price adjustments could save shoppers $40 to $60 a month.
Publix also heavily promoted its store brands. It continued to host a series of Publix Store Brand Challenges this year. The buy-one, get-one-free promotion invites shoppers to purchase popular national-brand items and get the Publix equivalent free. Promoted pairs included Hormel Beef Roast, 17 ounces, and Publix Homestyle Beef Pot Roast, 17 ounces; Progresso Italian Style Bread Crumbs, 15 ounces, and Publix Italian Style Bread Crumbs, 15 ounces; Campbell's Organic Tomato Juice, 46 ounces, and Publix GreenWise Market Organic Tomato Juice, 46 ounces.
Publix also kicked off its Essentials program, which focuses on reducing the price of a limited number of staples, including store brands like Publix milk, which received a 20% price reduction.
Meanwhile, some retailers made their private labels available to other companies. Safeway, for example, began marketing its O Organics and Eating Right lines through Lucerne Foods, a wholly owned subsidiary. The brands were made available to foodservice operators, including Google's in-house cafeterias in Northern California, and universities like Arizona State and San Jose State.
-- Julie Gallagher
Marketing Mediums
THE FOOD INDUSTRY went to great lengths in 2008 to leverage the power of the store as a marketing medium.
From new in-store shelf-tag programs to customizable television screens, in-store media became a high priority among manufacturers and retailers alike.
In response to health and wellness concerns, nutrition-oriented in-store media was a key initiative this year. For instance, Foodtown, Avenel, N.J., rolled out its “Easy to Eat Well” nutritional shelf-labeling program, which includes seven different color-coded shelf tags: Low Sodium, Organic, Heart Healthy, Natural, Gluten Free, Low Sugar and Healthy Kids.
The labeling program was developed in partnership with No Excuse Nutrition, now part of Vestcom International, a Little Rock, Ark.-based producer of shelf labels that worked with Foodtown on its traditional price shelf tags.
The stores provide more detailed information on in-store leaflets and on the Foodtown website, defining the various attributes identified by the color-coded shelf tags, and each store has four signs that give a brief explanation of the program.
Delhaize, meanwhile, rolled out Hannaford's Guiding Stars nutritional rating system to its Food Lion, Bloom and Sweetbay stores. The system assigned items a rating from 0-3 stars based on an analysis of nutritional content. Ratings appear on shelf tags.
Along with nutrition-based programs, the economic downturn in 2008 led many retailers to roll out price-based in-store media initiatives. Bashas', Chandler, Ariz., for instance, introduced color-coded shelf tags to help shoppers identify savings throughout the store. Red “As Advertised!” tags highlight advertised specials; green “Price Cut!” tags identify in-store specials; and blue “National Brand Quality, Great Low Price!” tags let shoppers know they can save up to 35% on Food Club and Top Care brands.
Over the summer, Safeway, Pleasanton, Calif., used “Summer Savings Marathon” shelf tags to encourage shoppers to load their pantries by offering coupons whose value depended on how many items were purchased. Shoppers who purchased nine to 14 items in a single transaction received a $5 coupon for a future purchase; 15 to 24 items, a $10 coupon; and 25 or more items, $20.
Another form of price-based in-store media came from Wegmans, Rochester, N.Y., which introduced “Great Taste Wins” shelf signs to highlight private-label products that beat their national-brand counterparts in blind taste tests.
Along with shelf signs, in-store media saw major advances thanks to new technologies.
One of the most progressive programs is the Wal-Mart Smart Network, which allows the retailer to monitor and control more than 27,000 individual screens in more than 2,700 of its stores across the country. Content can be customized by store, screen and time of day.
This means that if Wal-Mart Stores wants to sell more carbonated soft drinks, when the temperature outside of one, several or even thousands of its stores tops 70 degrees, a television screen on an endcap near the CSD aisle in each store can be programmed to advertise CSDs.
Wal-Mart said the goal of the Smart Network is to provide relevant information to its customers by providing a real-time understanding of what is being advertised and what is moving in its stores.
The Smart Network is currently in about 300 Wal-Mart stores. The remaining installations are expected to be completed by early 2010.
-- Carol Angrisani
