New shoppers baited by ads but not biting - traffic builders survey

Discount Store News, Jan 21, 1991

New Shoppers Baited by Ads But Not Biting

Discount, drug, specialty and department stores were generally able to both increase the percentage of their customers who walked out of their stores with a promoted item and boost the average number of dollars spent at the register during that shopping trip.

However, the consumers making these purchases are loyal customers, those who probably would have shopped at the store even if there was not a sale in progress.

Based on DSN's Fifth Annual Traffic Builders survey findings, some retailers were unable to get new shoppers to make the buy, even if effective advertising lured consumers into the store.

For Sears and JCPenney, both the percentage of customers who made a purchase and the amount ad customers spent declined. Reasons for successful versus unsuccessful promotions rest primarily on the retailer's in-stock positioning and selection.

Target was the most effective individual retailer studied in terms of its ability to sell the merchandise it promoted. The average discount industry sell-through rate for customers who went to buy a sale item and actually walked out the door with the merchandise is 75%. Target, which had a below average purchase level in 1989 (70.4%) made an enormous turnaround last year, exceeding Wal-Mart in its ability to make the sale.

As the number of people who walked out of Target stores with a sale item rose to 88.6%, the average ticket also jumped by $10 to $46, exceeding all other full-line discounters studied.

In-stock positioning could be one factor in Target's success; the chain recently fortified its distribution system to stores.

Wal-Mart ad shoppers had the largest mean ticket increase of all types of retailers with the exception of department stores. The average cash register receipt of ad shoppers rose by $17; department stores were up by $30. Sales of higher-ticket goods and more add-on purchases led to these dramatic increases.

Kmart, while still below the industry average in both mean ticket and percentage of customers who purchased an ad item, had improved over 1989. More attention to in-stock positioning, especially on advertised merchandise, has aided the chain's sell-through.

Discount specialty stores were unable to achieve the 92.4% sell-through rate enjoyed during 1989, the highest of all retail channels. Still, those who did buy the sale item doled out an average of $20 more at the cash register, making discount specialty chains second only to department stores in 1990.

Drug stores, which typically have low mean tickets at the cash register to the frequently low price of health & aid products, were able to boost the average ticket to $14, up $6 over 1989. The expansion of drug stores into food, stationery, housewares and other categories is key to this change.

* New/Infrequent Shoppers

While most discounters and drug stores generally were able to get more consumers to part with their money through promotions, the people they attracted were frequently customers that would have shopped the store anyway.

Mass merchandisers, catalog showrooms, department stores and specialty stores drew more new customers with their ads than discounters. (The high cataloger figures reflect response to both regular catalog distribution and special seasonal promotions.)

The good news is, discounters have established a loyal shopper base that is responding to everyday low pricing. The bad news is, the ad dollars discounters are spending and the gross margin reductions are apparently unnecessary in some instances, boosting store traffic by only 12% at Target and Wal-Mart, and by 22.8% for the discount industry as a whole.

JCPenney and Sears were both able to attract a large number of new shoppers, but they had less than a fifty-fifty chance of making a sale even after getting the customer into the store.

The merchandise discounters evidently chose to be their traffic generators--hair care/personal care, household paper, laundry products and cleaning products--satisfied their loyal customers and kept them coming back, but did little to expand the store's shopper base.

Topping the list of products that will get a new or infrequent customer into the store was soda pop. Nearly seven out of 10 people responding to an ad for this category would not otherwise have entered the store. Unfortunately, while soda pop is good at attracting new customers, it was not frequently mentioned as the product promotion that would get most consumers into the store.

The merchandise that pulled new shoppers into the store last year were home store items, domestics and kitchen appliances.

Women's dress pants/slacks, anti-freeze and pillows were also among the categories that had a high incidence of attracting new and infrequent shoppers in 1990. Based on the average dollars spent when shopping for these items, however, these are the products that are more likely to be cherry-picked rather than resulting in add-on sales volume.

Despite retailer efforts to draw shoppers of women's clothing--especially department stores and mass merchandisers--many of the products that fall into this category did not result in a very high sell-through rate, and a low mean ticket.