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What effect will Wal-Mart's posting of thousands of grocery items on its website have on the supermarket industry's online efforts? How will the roiling economy alter shopping patterns for food, beverages and household goods, and change the amount of online planning, budgeting, product information searches and delivery services sought by consumers? Despite the new sophistication of some supermarket

What effect will Wal-Mart's posting of thousands of grocery items on its website have on the supermarket industry's online efforts?

How will the roiling economy alter shopping patterns for food, beverages and household goods, and change the amount of online planning, budgeting, product information searches and delivery services sought by consumers?

Despite the new sophistication of some supermarket websites and online grocers with regard to product-purchase and usage insights, store services and marketing, are they consumer-centric enough to help win and retain shoppers, or are these efforts still too inner-focused on what retailers offer?

How are retailer innovations in the online space gaining traction with shoppers, building loyalty and differentiating operators?

How important will trusted and respected online efforts (in the form of websites, blogs, podcasts and virtual store tours) be in connecting supermarkets with younger and future generations of shoppers?

Analytical answers to these questions should fundamentally shape supermarkets' Web efforts going forward, according to a consensus of experts interviewed for this SN coverage of industry online initiatives. In turn, these efforts will be instrumental in keeping food stores in sync with shoppers even as trip counts go down, price hikes wreak havoc with household budgets, and chief purchasers scramble for the right insights and information that will keep their family's brown bags and dinner tables nutritious, tasty and satisfying.

Sources also said answers continue to evolve, and they point to technology convergence — Web use at home; portable devices, such as Jewel's Shopper Buddy, that help guide a store visit; in-store kiosks that give information and recipes; and scanners and mining of frequent-shopper data for customizing communications — as the wave of the connected future that could create more loyal customers.


“Convergence is the opportunity between virtual shopping and in-store shopping. It's on the drawing boards now,” said Bill Bishop, chairman of the Willard Bishop consultancy, Barrington, Ill. “Consumers want information that will allow them to customize purchases to their needs in nutrition, health, household and entertainment. They're looking for help filtering through 30,000 products to get to the several dozen that meet their needs at a given time. Imagine if you were able to shop with a giant brain of information, and were connected to offers from manufacturers that knew what was important to you. That's the picture of tomorrow, perhaps.”

For example, the nutritional filter is active at Safeway, Pleasanton, Calif. The chain's cardholders who sign up for its FoodFlex program have their shopping histories analyzed for nutritional worthiness, and they receive warnings if what they buy is high in fat or sodium, for example, as well as information as to what alternative foods they could try. People can also ask nutrition experts questions — a differentiating aspect of the website.

The website operated by Ukrop's Super Markets, Richmond, Va., has given Valued Customer cardholders the ability to easily prepare personalized shopping lists that suit special dietary needs, as well as access to more than 40,000 recipes, through the Grocery Shopping Network, for the past three years. More recently, as gas prices raced toward $4 per gallon, the chain's fuelperks! program awarded a 10-cents-per-gallon discount for every $50 purchase in the supermarket. By midsummer, local shoppers in Richmond had saved $515,000 on more than 1 million gallons pumped at 21 Uppy's gas stations through the program.

Meanwhile, in Pittsburgh, Giant Eagle is set to launch, a site where consumers will be able to earn credits in the chain's fuelperks! program by shopping online at more than 600 retailers.

Meijer, Grand Rapids, Mich., has been busy since June launching programs in its online space. First came its Meijer Mealbox recipe and budget-planning website,, which is the first in the industry to automatically marry recipe searches with the coupon experience, said the chain's e-commerce marketing director, Dawn Bronkema. The site has a mix of branded and private-label coupons, with the intent to include more from manufacturers. Novel widget technology lets users put Mealbox on Facebook, MySpace or a personal Web page, where it will continue to update with the latest recipes and coupons. The most popular coupons are being redeemed at rates of more than 25%, Bronkema added.

Mealbox allows shoppers to integrate meal planning, budgeting and purchase preferences online. Once a user posts recipes to a calendar, ingredients go onto a shopping list automatically, with printable coupons for relevant on-sale items.

In September, Meijer launched a test market of Grocery Express, which gives shoppers the option to order grocery and health and beauty care items online and pick them up at a store as soon as three hours later, for an assembly fee of $6.95 per order or $24.95 per month unlimited.

And earlier this month, Meijer began to sell groceries, laundry needs, pet supplies and other dry goods in bulk through the Grocery by the Case program at The chain estimates online shoppers will realize at least a 5% savings on more than 2,000 items, and they incur no shipping fee on orders of $150 or more.

Knowledge Resources

Sprouts Farmers Market, Phoenix, an operator of 25 natural food stores in the Western U.S., uses its farm-styled website to “reach customers outside our typical advertising radius and reinforce our brand position. We need to reassure our customers that they can still maintain a healthy diet on a tight budget,” Doug Sanders, president and chief operating officer, told SN. The site aims to instill such confidence through weekly and monthly promotions, recipes, educational events and price comparisons to Whole Foods Market.

The use of Healthnotes at the Sprouts site “answers many health- and nutrition-related questions,” added Sanders. “And since produce is a large percentage of our business, we highlight the country of origin of fruits and vegetables as the growing seasons change throughout the year.”

Its relaunched website brought Sprouts the image it sought, and has generated “a noticeable increase in traffic and positive feedback on new features such as Shopping List Builder,” he noted. Sprouts has integrated website feedback with its CRM database to analyze and identify areas for improvement within the chain, and has begun to use online customer surveys and blogs to help measure the success of new programs.

Supporting Bishop's convergence theme, Ken Cassar, vice president, industry insights, Nielsen Online, said, “A strong Web presence with broad and deep online content is critical for brick-and-mortar stores. Retailers should look for guidance on multichannel integration [from] the media industry, which has embraced the notion of content portability, allowing consumers to [access] content wherever they are, with whatever device they prefer. Retailers that are able to facilitate consumers' multichannel shopping behaviors will enjoy market share growth across the enterprise.”

The compelling need to turn websites into rich knowledge resources is clear to Jason Sokol, marketing specialist at Associated Food Stores, Salt Lake City.

“Retail websites are more important than ever, given the current economic situation,” he said. “The reason is simple. Consumers are beginning to plan more and more, and online ads allow them to do this in a very convenient way. This is especially important when you consider younger consumers [Gens Y and X]. They spend a lot of time online, and no longer use newspaper ads or watch as much television. The Web is one tool we can use to realistically reach these consumers.

“This is a win-win situation,” Sokol added. “Not only are retailers better able to reach younger generations with their Web marketing, they can save valuable advertising dollars by moving away from costly print ads.”

AFS did just that with its website to recast its private label in a more contemporary light. “Consumers get to know a strange family called the Westerns, watch new webisodes hosted on YouTube, and download a coupon for a free Western Family item of the week,” explained Sokol. The integrated marketing campaign includes print media, circular features, posters and banners in stores, and front-end staffers to assist shoppers with information about the private label.

Over a span of 10 weeks, more than 25,000 people visited the website and downloaded coupons. About one-third of site visitors reach the site through personal blogs, newsgroups and email links.

“The campaign has generated word of mouth,” Sokol said. “Resourceful visitors have been sharing the coupons through emails and their blogs. We anticipated a little of this, but have been amazed by how this has taken on a life of its own. It's very exciting, and we hope to take full advantage of this [dynamic] in future campaigns.”

Food Lion, Salisbury, N.C., also understands the pain felt by ordinary households, and it recently began to promote a family-of-four “Dinner for Under $10” on its website, through emails and on in-store displays. The chain plans to personalize communications further on the Web.

Karen Peterson, corporate communications manager at Food Lion, told SN that “the Web has opened up an entirely new world of marketing opportunities. One of our objectives is to develop strong relationships with our customers in a special way through interactive conversations.

“We're looking to enhance our Web content in the future and use more Web-based communication tools to connect with our customers in even better ways. Right now, our customers can check out weekly specials, search for recipes and view meal-preparation videos — all of which improves their shopping experience.”

Taking an aggressive tone in turbulent times, Price Chopper, Schenectady, N.Y., implores website visitors, “Have you CHOPPED your food bill today?” and invites them to “Tell us how you chop your food bill, and you could appear in our advertisements!” The home-page lead item is one of these shopper-centric videos.

Meanwhile, Kroger Co., Cincinnati, has also been seeking to help shoppers save money on the Web. It's e-coupon initiative with Procter & Gamble, which began Oct. 4 and runs until Dec. 31, eliminates the need for shoppers to clip coupons; downloaded from the site, the discounts automatically apply to the checkout ring.

Additionally, Kroger loyalty card holders who seek coupons on the free AOL service can automatically link offers for the portal's Meal Deals to their loyalty cards. “Consumers are spending less time eating out and more time planning weekly meals. With Meal Deals we're taking the legwork out of meal planning and giving consumers the money-saving coupons they need at the same time,” said Kimberley Partoll, executive vice president of new ventures for AOL, in a statement.

Two sample offers: Save $2.75 on Pasta Night Meal Deal ($1 off a Macaroni Grill dinner kit, 75 cents off of Kroger frozen chicken, 50 cents off of Pillsbury Crescent rolls and 50 cents off of Green Giant frozen boxed vegetables), and Save $2.25 on Betty's Birthday Deal (50 cents off of Betty Crocker cake mix, 50 cents off of Betty Crocker frosting, 75 cents off of Private Selection ice cream, and 50 cents off of Kroger Designer Plates and Cups).

Growth in Online Shopping

The online consumables market is already significant and growing fast: Consumers spend approximately $6 billion annually for online purchases of food, beverage and grocery items, according to a recent study by Forrester Research, which projected this figure will more than double, to $13.7 billion, within the next four years.

Addressing the younger shoppers cited by AFS' Sokol, Charles Golvin, principal analyst at Forrester, noted that “Gen Y [18- to 28-year-olds, comprising 38 million U.S. adults] is the audience that most companies are struggling to understand right now, because it's key to their future revenue growth.” Nine in 10 Gen Yers own a PC, and 82% own a mobile phone. They spend more time online than watching TV.

By contrast, Gen X [29- to 42-year-olds, representing 63 million U.S. adults] uses technology when it intersects with a personal need or fulfills a desire, according to Forrester. As of this past spring, 69% of online Gen Xers shopped online, a higher percentage than any other generation. Also, 21% read blogs monthly, up from 15% a year earlier.

Which kinds of products do active adult Internet users worldwide research online that relate to supermarkets? Cosmetics (by 27.5% of users), food (18.7%), nonfood groceries (15.5%), alcoholic beverages (12.3%) and non-alcoholic beverages (9.1%), according to a recent Universal McCann study, “When Did We Start Trusting Strangers?”

“The epiphany, when we earlier researched what retailers could do on the Web, was to start thinking about the needs of the consumer, rather than themselves or the competition. Retailers haven't responded to that too quickly,” asserted Bishop.

His point is that while stores have largely gotten consumer-centric, online efforts haven't yet gone as far as they should. “Shockingly, this concept, to focus on consumer needs online, is more of a surprise to them than you think. Their heads are spinning. They're in a pure defensive game right now, and there's not much out-of-the-box thinking.”

But since Wal-Mart “is going more high-touch in its online communications about food, beverage and household, it has to make it easier for supermarkets to move in this same direction,” Bishop added. “The grocery industry doesn't acknowledge how hard it is for new ideas to get attention in the executive suite. This will make them interested and will improve the chances for accelerating change.”

How will they change? AFS' Sokol has some ideas: “The days of Web 1.0 are dead. The Internet has evolved into a massive social network, where online users want input and control. The gap will widen between progressive retailers and those who haven't figured out Web 2.0. Static websites will continue to lose importance — keep sites refreshed with new and relevant content. We'll start to see strategic and focused blogs,” such as the one implemented by Whole Foods Market at

Annual spending on online groceries — expected to more than double in four years.

Source: Forrester Research

TAGS: Marketing