Just to fill the aisles Loyalty: Grocery stores are doing anything they can to get customers and keep them coming back.

November 08, 1996|By Liz Bowie | Liz Bowie,SUN STAFF

Clipless coupons, free turkeys, credit cards with rebates, coupon books that fit in your back pocket.

It's the 1996 version of the grocery store come on.

In the 1950s, '60s and even '70s, women were rewarded for their loyalty with a greeting at the door and a little special attention from the grocer they probably knew by name.

Today, grocery store chains are searching for any way they can to bring new customers into their stores and make them come back -- every week.

Both Giant Food Inc. and Metro Food Market started offering deals to bring in the consumer in the past month, and Valu Foods is mulling over the introduction of its own program soon.

At Giant it's called the no clip coupon, and there are as many variations on the theme of savings as the store can make up. For instance, buy one product and get another free. The customer buys the pumpkin pie, the store gives away the whipped cream. And of course there is the traditional approach of offering customers a few cents off the normal price.

"We are saying don't spend the time to clip the coupon," said Barry Scher, vice president of public affairs for Giant. "We advertise the deals you get. It has really gone along very well."

The products on sale are identified in the store with a sign with a red circle and a pair of scissors, and the savings are automatically rung up at the checkout counter.

Last month, Metro began its own program: a Metro MasterCard offered through MBNA America Bank. Customers who get the card will get a 3 percent rebate on groceries they buy at Metro and 1 percent on other purchases. The introductory interest rate is 5.9 percent, but it rises after six months.

Metro's card is a reaction to competition from Giant, which offered a Visa card earlier this year. About 60,000 people signed up for the Giant Visa, said Jeff Metzger, publisher of Food World, a monthly regional trade paper covering the grocery industry.

Metro President John Ryder said it is too early to say how well the 4-week-old experiment with the card is going, but he said "thousands and thousands" of people have already filled out applications.

"My competitor comes out with a 3 percent discount, I have to, too," Ryder said.

And Valu Food probably won't be left behind. It is negotiating with a New Jersey company to start a credit card, according to Lewis Denrich, president and chief executive officer of Valu Food.

When all the stores carry similar loyalty programs, Ryder said, then "what we have done is negate the whole market."

Ultimately, he said, consumers say they want a clean, convenient store with good produce and high quality meat, in that order. But, just in case, this week he is throwing in a free frozen turkey for anyone who buys a $100 worth of groceries at his stores.

Safeway has tried to combat the competition with a coupon book mailed to 2 million households each month.

More convenient than clipping from a newspaper and easier to use because it fits in a purse or a back pocket, the coupons are good for a month.

They can be used in addition to manufacturers' coupons, so that a person can get large savings on a single item.

Larry Johnson, director of public affairs at the eastern division of Safeway, said these savings aren't hard to find and there are stories about customers who have saved $40 or $50 when they bought $200 worth of groceries.

Competition for customers has gotten particularly keen in the past five years as more large chains with deep pockets have invaded the market. Not only do grocery stores sell food, but so do some price clubs and other large warehousers.

Take U.S. 40 in Catonsville, for instance, said Metzger. In a relatively short drive, a consumer could go to a Metro, Giant, Wal-Mart, Rite Aid and Safeway. In all stores there will be an overlap of merchandise.

"The level of competition is much more heated because the level of retailer is different," said Metzger. "You have a lot of heavyweights slugging it out."

Surveys have shown that about 17 percent of the public will shop at several grocery stores each week, picking up the best deals at each store. Another 17 percent say they will stay loyal to their current store. But the rest -- 56 percent -- are there for the taking, said Denis Zegar, president of the Mid-Atlantic Food Dealers, a trade group.

"But you have got to fight for them," he said. "And it is a bloody fight."

The next step in customer loyalty programs is cards that allow stores to create huge data banks of information about individual customers so that they can target savings programs. Safeway's Savings Club Card is the beginning of this new marketing phase. The company can tell if there is a surge in families with new babies.

"We use it for merchandising," Johnson said, sometimes sending out bonus coupons to customers. But Metzger said the cards could be used for much more efficient target marketing. If a family buys cat food, but not cat litter, the store could mail them a coupon for significant savings on cat litter.

And like airline frequent-flier programs, the cards can be used to reward loyal customers with prizes or free merchandise. For instance, if a customer bought Tide detergent five times at a particular store, he might get a free box.

Pub Date: 11/08/96

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.