Black Friday Promo in the Cards for Kroger
By Tom Ryan
On Black Friday, Kroger Co. began
a two-week promotion across its banners giving shoppers $10 back for every
$100 worth of gift cards they buy at their stores. Participating retailers
include Applebee’s, Bass Pro Shops, Bath & Body
Works, Best Buy, iTunes, Sears and Spa Finder.
Customers can
mix and match gift cards from participating retailers to reach the $100
amount and then receive $10 off their total purchase. The maximum savings
per household on the gift card sale is $50. The deal lasts through Sunday,
Dec. 13. It’s the first time Kroger has aimed such a promotion at Black
Friday.
The move comes
as Kroger, Safeway and other chains have been expanding gift card offerings
and increasingly using them and other non-traditional grocery items
for promotions. The activity also comes in an environment where competition
is heating up against Wal-Mart, which has become the largest food retailer
and runs some of retail’s most aggressive Black Friday deals.
Here are a few
other Black Friday and holiday promotions from supermarkets:
- Safeway and its banners ran a
similar promotion offering customers $20 off their next shopping trip of
$50 or more when they bought $200 worth of gift cards through their loyalty
card. Participating retailers included iTunes, Macy’s, Olive Garden, Red
Lobster and Sears.
- Under Stop & Shop’s Holiday Reward Coupon promotion, every dollar spent on loyalty cards earns
a customer one point. At 250 points, customers earn a 5% off Holiday Reward
coupon; 450 points, a 10 percent off coupon; 600 points, a 15 percent off
coupon; and 800 points, a 20 percent off coupon. The total amount of points
are tracked on receipts. Customers have until Dec. 10 to turn in their
allotted points for their Holiday Reward Coupon and have until Dec. 25
to redeem it;
- Shop Rite on Friday and Saturday
only was offering deals with its loyalty card on an Acer 11.6″ Net Notebook,
$288; a Haler 32″ LCD TV, $339.99; a Venturer 19″ LCD TV, $159.99; and
a Nintendo DSi Game System, $159.99. A separate “Holiday Gift Ideas” section
featured sales on the Holiday Barbie Doll, a Rocky the Robot Truck, an
X Box, and an Angels & Demons DVD.
Kings, the New Jersey grocer, ran two pages in its
circular touting “More Great Holiday Choices Than Any Other Food Market!” Items
included a Starbucks mug & coffee, France’s Domaine vinegar, a popcorn
gift bag, Italy’s Lucin soup and Scharffen Berger cocoa powder. Kings also
gave a 10 percent discount on purchases of $75 and
up on Friday, Saturday and Sunday.
Discussion
Questions: Is there a bigger opportunity for supermarkets to market around
Black Friday than they have in the past? How important is this on the
heels of Thanksgiving activity? What types of promotions make the most
sense for grocers in light of competition from supercenters, warehouse clubs
and others selling more than just food?
As long as they are not losing their shirts on the margin, it is a great opportunity. I actually used to be in this business and the focus on price was secondary. Place a bike in Kroger for the Thanksgiving weekend and watch them roll out of the store. Never mind that that same bike could be purchased at Toys “R” Us or Wal-Mart for 20% less.
Convenience and impulse were the focus in the past. I am not sure that is the case today.
It makes sense if the 4 P’s are strategically sound around the merchandise. Convenience and price are huge drivers, but so is the product. Similar to these kinds of impulse buys within Costco and Sam’s, if you’re there and it’s there and it’s something perfectly suited for your needs at a great price, why not save the trip going elsewhere for it?
I believe grocery retailers can and should capitalize on Black Friday opportunities, especially in the area of core cooking and baking supplies for the holidays. Shelf-stable and items that can be frozen could be a huge opportunity to take trips from the big discounters. I’m not sure about bikes but if there was a zhu zhu pet in Kroger, they’d sure enough draw every mom in town!
I think this is a great idea. Grocery shopping is a weekly chore for most households. If you can get some holiday shopping done at the same time, it’s a win win. I like the cash-back idea as it makes the decision to purchase on the spot an easy one. It’s also a great loyalty builder in a segment where price wins the day and building loyalty is a tough task.
Sam Walton said it best…if you want to compete, do what we do not. I’ve seen a number of retailers try to beat or meet Walmart at their own game. The results are typically disastrous. Anyone can match a price on an item; what other retailers typically can not match as effectively is the entire upstream supply chain. Walmart procures merchandise better than most on the planet. A retailer can match a price on a netbook or some other item, but they will likely lose profit while Walmart is making money.
The competitive strategy of meet or beat is not a sustainable strategy. How are retailers winning? They offer products and services that are not found within the walls of Walmart. Look to Wegmans or HEB as great examples of meaningful differentiation. Of course these competitors understand the importance of being priced right (effectively taking price away as a reason why a consumer would choose Walmart) and then giving the consumer products and services that you can’t find at a Walmart. Try finding a special cut of meat at a Walmart. You can’t. If it’s not in a pre-wrapped package, you can’t get it.
My holiday competitive message to retailers trying to capture a share of the wallet: Do what Walmart does not…and be right (assortment & price) on the things that you have in common.
First of all, I’m betting most of those 4 a.m. shoppers aren’t crawling home from the mall and making dinner. Next, why devise yet another program to give away profits? How about taking the Wal-Mart strategy to heart and advertising consistent savings, not another grab and go opportunity?
I’m not big on the whole Black Friday campaign but I do agree that grocers could benefit from the hype. Why gift cards though? Why not tie in some core products for entertaining that are relevant to the season? The margin opportunities for core products outweigh anything that the gift cards could bring in.
And why are you pushing your customers away with different branded gift cards anyway? Why not offer a Kroger gift card with a minimum purchase? I would want my customer to come back and spend the bonus in my store. Gift cards are great and I do think they offer a huge benefit to merchants, but we are working with reduced foot traffic and sending customers away to different retailers is not the best strategy to capitalize on the traffic that is there.
Rather than compete with Black Friday that includes huge deals on non food items from Wal-Mart, Target, Best Buy, Sears, etc, grocers should focus on creating their own huge savings program a few days later and focus on their core business: food. Adding some non food items is fine as long as the margins are there to support your efforts.
After the dust settles from Black Friday, people still need to eat and more importantly, bake for the holidays. Create exciting programs around themes you are familiar with and have experience running. I am confident your manufacturing partners will be interested in participating in your one day blowout.
During this holiday season, I’ve seen more of these promos and non-traditional products from grocers. But they’re not limited to only Black Friday or the holiday season–they’ve become a regular, year-round offering.
In general, I tend to like the promos more than the products. For example, the gift card promos are good and, for savvy consumers, a smart buy. But I’m less fond of grocers offering non-traditional products. My local Giant Eagle is hawking a chest freezer that’s set up in front of the service counter–no takers yet. For over a year, another grocer has had a rack of apparel stamped with our local high school logo–and it’s still gathering dust (it doesn’t help that we have a losing high school football team).
Adding TVs, toys and net books to the grocery aisle feels too “me too” and desperate. I’d rather grocers spent more time and dollars creating an offering that really differentiates their chain from the competitor’s chain. These me-too goods feel too much like grocers are simply playing follow the leader.
Realizing that supermarkets are not just supermarkets any longer appears to be at the basis of this approach. However, do supermarkets offer enough of the non-grocery goods that consumers are planning to purchase for THEM to think of lining up at a grocery store rather than another retailer? After carefully plotting a strategy of which stores to visit and when to purchase what items, are the consumers going to add the grocery store to their list for one item they want to purchase that may be on sale or to make a trip for food? That seems unrealistic.
Could the grocery stores do something that would attract people to the store? What about offering help on how to do something more interesting than turkey sandwiches with the leftovers? For years Pizza Hut had a great promotion after Thanksgiving about offering a change from turkey leftovers. What else could the grocery stores do to be part of weekend activities that is distinctive for them?
The sales being executed by the grocers listed are excellent; a great start. It’s about time they entered the retail world and at least tried to take advantage of the masses that are out shopping that day. You could imagine other less price oriented deals as well, like free coffee for those who have been up since 4 a.m.), or deals on pizza (huge weekend for pizza) or leftovers recipes and add-ons, or even quick meals to go. Price is one thing (the easy thing), but let’s hope that price is only the base of the triangle in terms of good ideas to explore.
I’m with Doron on giving gift cards that send shoppers to other retailers (why, why, why?). To me, grocers have a big opportunity to showcase NON-holiday convenience foods this time of year. Kroger, Whole Foods and others that do a good job with upscale noshies should promote easy-to-assemble, indulgent meal solutions that don’t require cooking (crackers, cheese, wine, pate, fresh fruit, olives, etc.).
Not everyone is obsessing on baking and thawing turkeys just yet, though holiday stress is a daily reality. Why not do everything possible to keep stressed out shoppers out of restaurants?
BF is an incredible day for any retailer. That supermarkets have shut themselves out of this retailing effort for this long is unbelievable. BF promotions at supermarkets should be a huge shopping day, where people purchase baskets of goods, just like in the GM sections at other stores. It is only the supermarket’s own fault that this continues to be an issue.
I think that grocers can do more than they are currently doing with promotions in the event “tie in” front–but PLEASE, not on Black Friday. The absolutely last place most shoppers want to head after a week of cooking/baking and a day of Thanksgiving feasting is a grocery store!
But for the month of December for instance, offering coded coupons good for discounts on holiday concerts, museum entrance fees, light shows, sporting and theatre events (with a stated amount minimum grocery purchase and loyalty card) could appeal to many people looking to plan family outings. If the grocer can sell these discounted tickets on site, all the better.
In the market-wide battle for wallet-share, he who sells soonest sells most–because shoppers will eventually tap out their budgets and stay home.
The supermarkets who are promoting “non-traditional” merchandise this week have caught on to this reality. They have the traffic and are vying for early Benjamins over late Washingtons.