Ease Financial Pain to Win Shoppers

Articles
July 16, 2010

Ease Financial Pain to Win Shoppers

nvestors who once took solace in the defensive philosophy that ‘people have to eat,’ and placed their money on food, beverage and retail stocks, have found new harsh truisms as this recession wears on: No one has to buy in your store. No one has to buy your brands.

Investors who once took solace in the defensive philosophy that ‘people have to eat,’ and placed their money on food, beverage and retail stocks, have found new harsh truisms as this recession wears on: No one has to buy in your store. No one has to buy your brands. 

Recent studies have shown supermarkets continuing to lead in trips, yet losing share of trips to a multitude of formats finding new ways to connect to consumers’ needs. Increasingly, cold cash is on the table as the way to bond with shoppers and make it tougher for people to separate from particular stores.

Walmart, for instance, is testing an online pilot program issuing loans between $5,000 and $25,000 to small business operators – a key customer component of its Sam’s Club warehouse clubs that has found it tough lately to secure financing. Many banks that took federal bailout monies haven’t been lending the way the government had hoped.

A lending partner, Superior Financial Group, LLC, administers the loans to qualified Sam’s Club members, and the retailer earns $50 per loan, according to The Wall Street Journal. By aiding their customers’ cash flow, they aim to indirectly help their own.

Meanwhile, the Midwestern 220-store Hy-Vee chain ran a three-day ‘Fill the Fridge’ sale last weekend that gave consumers back more than $90 in food and beverage coupon savings on a variety of brands once they paid $89.99 for either an Avanti or Haier 1.7-cubic-foot refrigerator. This ran at a perfect time for Back-to-School (dorm room fridge) and summertime entertaining, when a second unit could handily keep snacks and beverages chilled.

The Lempert Report believes the advertised food and beverage brands were the ones to share the cost of reimbursing consumers for their appliance purchases, in exchange for high-impact visibility and event lift. For consumers to derive full value from the promotion, they need to like and use the involved brands. Still, we find the concept compelling.

In our view, retailers needing to up the ante to keep shoppers coming should look to these partnership models as low-risk examples of programs that will wear well if the recession persists. Which other value-added, multiple-category promotions might work? How about ethnic themes that help expose some exotic foods, oils, sauces and seasonings, and revolve around a blender? Or a health food theme that involves brands from many parts of the store and connects with a local gym membership or a water cooler? Ideas that suit your local markets would be best.