Promote Local: Retailers’ Circular Versioning Strategies
With all of today’s methods of marketing to consumers through digital channels, be it a push ad to your smart phone for a restaurant you just passed or an online banner for a vacation destination you mentioned (thanks Big Sister Siri), retailers’ print circulars may seem about as advanced and dynamic as my iPhone 6 (you call it outdated, I call it “vintage”). However, we find that the savviest of retailers take measures to customize even these promotional vehicles of old to ensure they’re hitting all customers with the right stuff at the right prices at the right time to optimize spend and, hopefully, drive sales.
One way in which we see tailored or “localized” circular strategy is in response to local demographic tastes and needs. Heaven forbid the Beverly Hills Housewives squad gets served an ad for boxed wine from the local Pavilions - best believe they’re getting a version featuring Veuve Cliquot or, in the example below, a casual $44.99 bottle of Faust Cabernet Sauvignon (stars, they’re just like us).
Or think of shoppers in Dallas. Stores in neighborhoods with high Hispanic populations may see ads for serrano peppers while others a few miles away see organic avocados or kale in the same ad block. Particularly in cities where the dynamics can change from block to block, it is important for retailers to stay relevant to local preferences or risk alienation from customers with a one-size-fits-all approach.
Another way in which retailers customize their print promotions is in response to local competition. Stores that find themselves to be the only game in town may raise the promoted prices in their circulars there versus other locations where they have to be more competitive. Similarly, retailers may “localize” by offer type to tactically respond to local competitors.
And a final reason why retailers may drop nuanced circulars based on different locations is to test a new promotional strategy, product, or service. If a retailer wants to test out a new EDLP messaging strategy or a second weekly circular drop, they may choose a few test stores to see how shoppers react before going all in.
It seems like a no brainer that retailers should promote relevant products and prices according to local dynamics. So why don’t all retailers take this bespoke approach? Coming back to reality with our favorite buzzkills Time, Resources, and Money, such tailored strategies in a physical circular format take investment that may not be feasible for all retailers in all locations. Though that isn’t to say they can’t get smart about when and where to leverage such tactics or when and where to pay attention to competitors’ own efforts.
One crucially important and soon-to-be relevant shopping event that comes to mind is Back to School – the one time of year when us “adults” do not look back with misty eyes and jealousy (but really, kids, stay in school as long as you can). With regional and local schools all with varying start dates, this creates the perfect opportunity for retailers to time and place their assortments of backpacks, notebooks, and granola bars accordingly, and then get out when they are no longer crucially relevant. And a quick study using Numerator’s 2017 Store Level Data shows some retailers do just that.
The below images show maps of Aldi store locations across the U.S. from the end of July through the beginning of September last year, along with circular pages color-coded to these markets. What we see here is that stores with earlier school start dates (Kansas City, Birmingham, etc.), all saw Back to School-themed pages earlier than those with later start dates (which saw promotions for chicken breasts and sausage instead). These early start locations then started to message other savings (in this case, on organic private label groceries) in September once the key Back to School weeks had passed. By tailoring a single page, the grocer looked to capitalize on the needs of those early Back to School markets and then push its other departments once the shopping event was no as longer relevant. Couple this with a dynamic digital strategy and we got ourselves a ball game.
With retailers starting to tease Back to School/College in the next week or two, it will be interesting to see which make the grade with such a tailored strategy and which go for a blanketed approach and risk losing potential sales. Even for those without such a plan, tracking those markets with the early school promotions could be a good sneak peek of what’s important this year and how such products are being priced. In any case, visibility down to this granular level can be very telling for key shopping events that are subject to timing, climate, and assortment differences such as Back to School.
And while manufacturers and brands may think they’re in the clear, it behooves you, too, to be aware of such versioning tactics to make sure your products aren’t getting the boot in any places where you shelled out the money for those ads. In fact, though we focused on retailers here today, there are several reasons why manufacturers should consider tracking promotional data at the store level.