Last updated on June 2nd, 2017 at 09:12 am
Consumers historically have turned to print circulars for grocery shopping decisions. They make shopping lists and plan trips based on the weekly sales and special offers. Today, shoppers are becoming more comfortable with personalized digital communications and coupons delivered to their mobile devices from their neighborhood supermarkets. To attract younger customers, grocers are increasingly investing in digital circulars to complement traditional circulars.
The recently released report, “2017 Promotional and Advertising Practices Study Among U.S. Grocery Retailers,” published by Aptaris and dunnhumby, addresses the shift from traditional to digital circulars and provides these key findings:
Paper and digital circular practices
• While change is under way, weekly distribution of the print circular is still the norm, with per-store distribution averaging around 9,600. Looking forward, retailers are expecting reduced circulation, including lower paid subscription usage and lower or stable total market coverage (TMC) usage.
• Temporary Price Reduction (TPR) and other vendor allowances have the greatest influences when determining items and promotions for the circular. The prior-year issue is the second most common driver for circular item selection.
• Predictions are that perishables, fresh prepared foods and private brands will take a greater share of the items in the flyer in the next three years.
• Having a digital circular has become a must. The level of sophistication, however, varies widely, with larger retailers more likely to offer an interactive version that is searchable, clickable, linked to recipes and connected to an online list-generating tool or ordering.
Weekly circulation is still the norm
On a per-store basis, food retailers average a print circulation of 9,605, with a median of 8,785. Regional differences are stark, with the Northeast averaging a much higher per-store circulation than food retailers located in the South or Midwest.
While food retailers are eyeing a variety of changes, weekly circulation is the norm today for 94.1 percent of respondents. Other frequencies include mixed systems based on shopper demographics or format, and some stores are starting to test reduced frequencies. For example, half of the stores surveyed are weekly, the other half bi-weekly to start testing the impact.
About four in 10 retailers include coupons in their circulars, which is slightly more commonplace among smaller retailers than chains.
Prior-year issue guides circular item selection
The highest share of respondents , 47.1 percent, say TPR and other vendor allowances are a driving factor of items and item count selected for inclusion in the circular.
The prior-year issue also tends to serve as a starting point when determining which and how many items to include in the upcoming circular, according to 41.2 percent of survey respondents. Analytics gain importance depending on the size of the company.
Reduced circulation and pages, but more fresh items in circular lineup
Looking about three years out, the majority of food retailers anticipate a circular with fewer or an equal number of pages, sent at the current rate or less, and with a reduced circulation. Most expect item count per page to remain unchanged, but instead foresee significant item type changes, with a greater allocation to perishables, private brands and deli/fresh prepared foods. Mid-size regionals are most likely to integrate perishables at a higher rate, whereas larger chains are expecting to emphasize private brands and prepared foods.
Digital circular has become a must
The high usage of the print circular goes hand-in-hand with an online version—one-store operators being the exception. Most medium and larger chains have digital versions of the circular.
The level of sophistication of the digital circular varies widely across retailers. Larger retailers, operating 50 stores or more, are much more likely to offer an interactive version that is searchable, clickable, linked to recipes and connected to an online list-generating or ordering tool. One respondent noted, “Right now, our online circular is just a PDF of the paper copy. We need to build a more interactive circular that can actually drive sales rather than serve as a research mechanism only.”
Leveraging digital, social and mobile
According to IRI shopper research, the average shopper spends six hours per day online. Digital, social and mobile media play an opportunistic role in CPG shopping behavior. The good news is that consumers are more likely to search retailer sites than they are to visit manufacturers’ sites—offering retailers an important gateway to connect with shoppers pre-, during and post-visit. To date, social media is less influential in shopping planning, but it is a critical partner in education and meal planning, which sets the table for overall sales, says IRI. Millennials are the trailblazers of online shopping and planning. They are more likely to research recipes, compare prices and purchase online.
Source: The 2017 Promotional and Advertising Practices Study published by Aptaris and dunnhumby and conducted by 210 Analytics. This is the first in a four-part series. To receive a free copy of the full results, email Rich Keiser at [email protected].
