Grocery buys too selective for circulars

Feb 25, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from MarketingCharts, a Watershed Publishing publication providing up-to-to-minute data and research to marketers.

An analysis of more than 32 million shoppers across almost 10,000 grocery stores during a 52-week period ending in mid-year 2013 found that, on average, shoppers bought just 0.7 percent of available products. The study, conducted by Catalina Marketing, also reveals that this selectivity tends to apply across various grocery departments and is relatively consistent when segregating shoppers by age and income.

Consumers’ selectivity was even more pronounced when looking at their weekly and quarterly shopping habits.

What’s interesting to see is that the figures don’t appear to have been dragged down by infrequent or low-value shoppers. Instead, the top shoppers in the study — who accounted for 80 percent of retailers’ sales during the period — still only bought 1 percent of available items.

The researchers point out that "the proliferation of targeted products has achieved the goal of meeting the more individualized preferences of today’s consumers."’ But Catalina makes the case that traditional promotions don’t work for these selective shoppers, arguing instead for more personalized programs.

As a case study, the researchers present data concerning a major grocery store’s Memorial Day weekly circular. Of the 1,172 items included in the circular, not a single one showed up in two-thirds of the shopping baskets during the week, while another 17 percent of baskets included only a single advertised item (equating to less than 1 percent of the items advertised). A week later, 74 percent of baskets didn’t include any items from the circular, while 15 percent contained just one.

The takeaways? Catalina recommends that:

  • Retailers and brands better understand the individual needs and behaviors of shoppers so as to deliver them more relevant offers and communications;
  • Marketers examine mobile solutions that can pinpoint shoppers’ buying histories and in-store location so as to get their attention at the "point of decision;" and;
  • Marketers retool their delivery of promotions and offers so as to enhance their effectiveness for the customer and brand.


Has the circular become irrelevant for grocery’s hyper-selective shoppers? What are the best current alternatives for grocers that want to personalize deals? Do you see the circular being reinvented or becoming increasingly irrelevant over the next decade?

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16 Comments on "Grocery buys too selective for circulars"

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Richard J. George, Ph.D.

Circulars represent shotguns. Today, savvy marketers need to put down the shotguns and pick up the rifles. I have previously seen the Catalina research and tend to agree with its findings and recommendations. In some respects the proliferation of products (despite claims of SKU rationalization) represents a retail mentality that says “I’m not certain of your needs and wants, however, we have everything, just look.”

We have the shopper data (perhaps even too much data). Now we need to turn it into relevant, rifle-like, target marketing. Data analytics only makes sense if we can take the data and develop relevant marketing and merchandising campaigns.

Max Goldberg

Grocers need to customize offers to customers. Circulars are great ways for grocers to generate name awareness on someone else’s nickel, but they do little to drive sales.

Customizing offers means spending more money to gather and analyze data, something most grocers are loath to do.

Mobile solutions should focus on making the shopping experience quicker and easier, not bombarding consumers with offers based on their in-store location. Nothing turns consumers off more quickly than endless push advertising.

Retailers should think like consumers, not like advertisers. It may cost more, and may mean the end of the weekly circular, but it will generate more sales.

Gene Hoffman
Gene Hoffman
3 years 6 months ago

The grocery circular, primarily a long-running relic of the mass merchandising days, remains relevant to many product merchandisers. They crave a sense of involvement in the total operations. Having their products listed in a circular helps with that need. But for customers, the grocery circular is of little value but for helping to identify if a store still appears generally competitive, which is an expensive route today to that goal.

To personalize deals to a specific store’s base, give the store manager decentralized power to tailor and innovate deals to customers and potential customers, and hold him/her responsible for the store’s sales and profit results.

As to the circular’s future, it lies in the yet unexposed imagination of most grocery retailers. Without that, the circular will become like an expensive, non-productive government mainstay until it dies.

Dr. Stephen Needel

If the average shoppers buys 300 SKUs a year in grocery (Nielsen) and the average grocery store carries about 40,000 items, the expected number of shoppers buying any one SKU is 0.75%. So a hit rate of 0.7% is right on target. What it does suggest is that the circulars are not pulling in incremental buyers, although they may be increasing purchasing among existing buyers. The question is whether circulars are profitable or not.

Larry Negrich

There is a certain segment of shopper that still expects and responds to circulars. A customer of ours still sees the circular, both in-store and delivered to homes, as a major traffic driver. However, even this client has moved a good amount of marketing spend to digital channels. Print circulars are definitely on their way out, to be replaced by digital solutions delivered to app, available via mweb, or on a form of in-store digital device.

Tony Orlando

Sorry, but I do not agree with the circular being irrelevant, at least in my area. It would be nice to know what our customers buy – right down to the last toothpick – but in retail, you still need a respectable amount of SKUs inside your store regardless of the theory just reported. Browsing is still something customers do, and I will continue to fine tune our selection by eliminating slow movers.

Circulars do very well, as customers know who has what on sale, and they will shop the ad items very heavily these days. Money is running thin, and people count on a hot circular to save money, and to think pinpointing individual needs is all you need is foolish.

I have no problem doing other high-tech solutions for sales, but some old fashioned print still does very well, as long as the items are high-volume movers at great prices. It is up to the store to be ready in how to sell the cross-merchandised items, and meals to go, that add to the bottom line. I expect many will disagree, but that’s fine, as I am open for new ideas to help our store.

Doug Garnett

This article asks about circulars, but fails to represent their impact before suggesting they don’t have impact (an absurd idea to anyone who tracks POS numbers).

Circulars affect a segment within the shopping population. And they cause that population to purchase far more. To attempt to analyze circulars using population-wide averages is erroneous. And to attack the circular based on studying one store is also erroneous – because the choices about what to put into the circular and how it is made quickly make any study of this sort absurd.

Ralph Jacobson

Old habits die hard. Circulars may be with us for some time to come. Hard copy newspapers are still out there, right? As long as they continue, so will advertising in them.

I don’t think it’s irrelevant. Grocery should continue to migrate toward a more mobile shopper and leverage tools out in the marketplace that can help target a demographic of one.

And, as I say this, other retailers are bringing back huge catalogs via US mail. So, old habits do, indeed, die hard.

Li McClelland
Li McClelland
3 years 6 months ago

Circulars which, in addition to new products, feature staple “specials” or loss leaders which are purchased by nearly every family (e.g., hamburger meat, milk, cheese, laundry detergent, pet food) still serve to bring people to that particular store where they then buy their other favorite hyper-selective products. Where I see stores wasting shelf space – and where stores should look at their base product lines and ads – is in the multiple varieties/flavors they offer of many products. Who wants to paw through six kinds of crackers or five sorts of cookies or four smells of laundry soap? Hint: we don’t.

Peter Charness

Like many marketing vehicles, correlating cause and effect for a circular is a (pardon the pun) circular argument. If one can’t establish the tie directly between ad space/cost and incremental sales, then one can always argue “visits” impact, or as a last resort, brand building. Never underestimate the power of marketing to select the best statistics to prove a point.

Perhaps testing this could involve not running a circular in a few test markets to see if there was any impact. Trouble is, most retailers are so addicted to this vehicle that they may be afraid to stop, even for a week, just in case there is a sales volume fall out.

Jonathan Marek

I don’t think the facts listed support the conclusion. First of all, there is nothing said about incrementality. To take an extreme (and unreasonable) view, if only 30% of baskets contain a circular item but none of those shoppers would have shopped the store without the circular deal, then the circular created an almost 50% lift in traffic (30/70). Now, that’s absurd, but what if 1/5th of that traffic is incremental. Then the circular still would pay out well. The only way to know is to test your circular program aggressively, to truly determine incrementality.

Of course, that doesn’t preclude testing lots of other more targeted vehicles — including those Catalina is pitching.

George Nielsen
3 years 6 months ago

I believe most of you are reading the results incorrectly, as is often the case with these kinds of studies. Dr. Needel is correct in that the study was primarily on how many products that the average consumer buys that are on the store shelves. We all know that this is a very small number. The side study about circulars that they did was very small — two weeks for one store, in one city. This doesn’t tell us anything about the effectiveness of flyers. Tony, as usual, gives us the straight goods.

James Tenser

Circulars remain important because they are a media channel that the retailer can control and use to capture a fair share of trade deals. If absolute response rates seem slim, I’d challenge a comparison with email click-through rates or other forms of digital media.

New channels hold plenty of value too, but the humble circular still represents a cornerstone of retail promotion. In the current era it is viewable online; embedded within mobile apps; integrated with frequent shopper programs; posted on social media; delivered in multiple versions; and subject to greater analytic scrutiny than ever.

Circulars remain a core element within the larger marketing portfolio for many retailers. Irrelevant? I don’t think so.

Gib Bassett
The research seems to speak for itself. Generic direct mail has long not been a high response investment for a while, and the circular is no different. Were it not for consumer/shopper behavior so rigid it might not be as significant an issue, but yes, retail/grocery and the suppliers need to be more personalized in their communications as is economically feasible. If direct mail is challenging to customize on a per-consumer basis due to a lack of insight, mailers can point recipients to a mobile or online interaction to (1) register with the retailer’s loyalty programs, (2) submit answers to a series of questions leading to a custom offer redeemable via mobile device or (3) simply obtain greater information about current sale items. In all those instances, you build up communication permissions and insights to fuel future targeting. Better still, is stitching these mailers to POS or syndicated sales data per DMA to relate the mobile/online interactions to specific buying centers to observe return. Connecting direct mail to online channels helps make the programs more measurable, with the ability to put a value on the creative and specific offers that you cannot do so easily with general FSIs. The more data… Read more »
George-Marie Glover
George-Marie Glover
3 years 6 months ago

It’s not an either/or proposition. Circulars are still a mainstay for many grocery shoppers, especially for staples or seasonal items. However, more targeted programs that send members coupons based on their regular purchases or discounts towards overall purchases are a wise move.

Graeme McVie
With each passing year, the reduced importance of the flyer is becoming more inevitable. The evidence is mounting: the declining effectiveness and ROI, the demographic shift from baby boomers to a generation raised on digital, and the shift in device preference to mobile. Programs such as Safeway’s Just for U, and Loblaws’ PC Plus in Canada, point to the potential path forward. With both programs, shoppers can access digital coupons, with new savings added weekly. They can download personalized deals based on their own shopping history and delivered directly to their email inbox or mobile; call it a high-tech flyer. Grocers who are ready to look to life after the flyer need to get the basics right to consistently deliver relevant and timely offers. Using data from a loyalty program to understand your customers and determine their needs is an essential first step. Developing internal capabilities to design and execute highly personalized offers enables the responsiveness that customers now expect. Building an ongoing knowledge base of customers’ offer responses and channel preferences is essential to continued relevance over time. In an onmi-channel world, communicating through each customer’s channel of preference will become table stakes. Retailers need to start now and… Read more »

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