Stores innovate loyalty programs, circulars

While traditional circulars still have their place within retail — especially when it comes to reaching older shoppers — there’s no doubt that the tides are changing as loyalty cards take a greater share of the 
promotional spotlight. 


A recent study by market research firm Polaris Marketing Research, for example, found that Americans are participating in loyalty card programs more now than ever before, and many are participating in five or more 
loyalty programs.


The highest rated reason why Americans join is “to save money/get discounts” (93%) — not much of a surprise. The second-highest rated reason was “for the reward offers” (91%), confirming the demand for customers to receive some type of offer first (whether it’s discounts or free stuff) before they become “loyal” to that specific brand or company, according to the research.


When asked if having a specific brand/company loyalty card influences their decision to purchase a product or service, more than half responded that it “influences me a 
little” (53%).


Indeed, a more value-conscious consumer has emerged from the chaos and uncertainty of a flailing economy, and that is forcing suppliers and retailers to get more creative about how they deliver value to the consumer. 


“Delivering truly shopper-centric value is going to be key, and neither manufacturers nor retailers can do it alone,” Navin Gautam, principal of client services for SymphonyIRI Group, noted during a June presentation at National Association of Chain Drug Stores Marketplace Conference in Denver.


Given this, one could surmise that manufacturers will increasingly shift their promotional support away from traditional circulars and more toward loyalty programs, and even social media, as retailers increasingly jump aboard the loyalty card bandwagon to capture more dollars and the loyalty of today’s value-conscious shopper. 


This month Walgreens debuted its highly anticipated, new loyalty program Balance Rewards. The theory behind Walgreens program: Not just to offer blanket discounts to everybody who holds the card, but rather to segment offers to specific customer segments and reward them based on their value to the chain. (For more, see story on page 80.)


Meanwhile, CVS/pharmacy has been working to take its long-standing, highly successful ExtraCare loyalty program to a new level with a Beauty Club and the pilot of a healthy rewards program. The retailer also unveiled in June a revamped website that features a hub for ExtraCare members to help them manage their savings 
and deals.


That’s not to say, however, that circulars have completely fallen by the wayside. According to a U.S. Buying Trends report released in August by The Nielsen Co., value-seeking may be important to all shoppers when buying groceries, but circular use is the greatest among 
older generations.


Gautam also noted in his Marketplace presentation that, according to research, the use of coupons and circulars in trip planning remains strong, but there are slight differences that exist across generations. Younger generations tend to clip and use more coupons compared with older generations, who tend to 
research circulars.


Meanwhile, ECRM recently took a closer look at how retailers are promoting in circulars, zeroing in on the expansive personal 
care market.


“This is great data for suppliers to understand how retailers are promoting the category. When a supplier partners with a retailer to publish ads in their circular they should know how that retailer is promoting their category, and what their competition is doing. This will help them to plan and execute more efficient ads,” said Chelsea Kilway, CPG promotional business analyst for ECRM, of the recent 
ECRM study.


The “Insights on Retail Promotions” is a presentation that ECRM puts together for retailers and suppliers to highlight some key trends in the business prior to the 
category-specific events it holds throughout the year. It is a good example of how the company has evolved its business beyond the 100 or more events it hosts around the world each year.


“Before each event we provide the attendees with a promotional snapshot of how the categories they operate in are being promoted,” Kilway explained.


Among the findings for the 52 weeks ended Sept. 1, 2012: In retail circulars, hair care is the top promoted sub-category across the personal care category, followed by skin care and then oral care. 


In addition, Procter & Gamble took the lead (26.2%) as the top promoted manufacturer across the personal care space, followed by Unilever at 9.6%.


What some industry observers might find especially interesting is that private label is the leading promoted brand across the personal care channel at 6.3%. The second highest is Olay at 4.3%, followed by Gillette at 3.7%.


While this specific ECRM data looks exclusively at retail circulars, Kilway noted that the retailer loyalty programs have — and will continue to — impact the personal care promotional space.


“We have seen a lot more of our clients take interest in these promotion types. … They are more interested as to what these rewards are that you get with these cards. So, based on the work we’ve been receiving, I can see there’s a greater focus on that. … As people are fighting for share of that market, I think it will be more prevalent, and we will see it more as time goes on,” Kilway said.

For the full report, click here.