Focus on EDLP as price/item ads trimmed - Fifth Annual Traffic Builders Survey

Discount Store News, Jan 21, 1991

Focus on EDLP as Price/Item Ads Trimmed

The Fifth Annual Traffic Builder's Survey conducted for DSN by Chicago-based Leo J. Shapiro & Associates confirmed that discounters continued to pare price-and-item advertising during 1990, moving steadily toward everyday low pricing. Nonetheless, customers spent more, on average, during a promotion-driven shopping trip than in years past.

Last year was one of returning to retail roots: discounters emphasized commodities like paper goods and cleaning supplies, while department stores and merchants like Sears and JCPenney focused more on women's apparel, surrendering aggressive domestics promotions to the growing ranks of bed & bath specialty stores and direct mail retailers.

Overall, 1990 was a good promotional year for discounters. While roughly the same number of people responded to promotions as last year (75%), when they bought, they spent more dollars. The average purchase of consumers shopping for an ad item was $40, reflecting a fairly steady climb since 1987 when it was only $28.

Customers spent more when shopping a promoted category, but reduced advertising by retailers resulted in a steady decline in the number of consumers who knew of a sale before going to the store. In 1987, 70% knew of a sale before shopping at a given store; by last year it had fallen to 45%.

The top five traffic builders at discount stores during 1990 were hair care/personal care, household paper products, laundry products, household cleaners and women's jeans.

Candy--which was 1989's leading traffic builder among discount store shoppers--did not appear on the 1990 list because the survey was conducted in September instead of October when Halloween drives candy sales and promotions.

Promoting a category more did not necessarily result in consumers spending more. Hair care/personal care items were named as the advertised product the shopper was planning to buy at a discount store more than 9% of the time. While this reflects a 2% increase in the number of shoppers who were destined to buy this category, they walked out of the store spending less in 1990 than in 1989--$22 in 1990 compared to $27 in 1989.

The same was true of household cleaners where the average amount spent when shopping for this category on promotion declined by $10, to $24 in 1990.

In contrast, household paper products on ad generated the same customer traffic (7.9%), during the two years, but also resulted in increased spending on a marketbasket of goods in 1990. In 1989, an average of $33 was spent among shoppers responding to an ad for household paper products, compared with $39 in 1990.

The lower priced commodity items were generally more effective in getting shoppers to pick up additional merchandise. A discounter that advertised women's jeans and household paper products during 1990 could expect shoppers of either category to spend an average of $39 at the cash register, based on the study.

Department stores reclaimed many of the promotion-oriented women's apparel shoppers who had strayed to discount store channels during 1989. Department stores had put women's wear promotions on the back burner during 1989 when these retailers experimented with non-apparel categories with which other retailers were successful.

These non-apparel categories included home store items (mirrors, closet organizers and pictures), sheets, comforters, bedspreads and toys/games. This merchandise was named by shoppers as being items they had gone to the department store to buy in 1989, but were not instrumental in gaining store traffic in 1990.

The beefed-up promotions in women's apparel during 1990--whether through greater ad frequency, or sharper pricing or both--were evidenced by huge numbers of shoppers who said women's clothing ads were the magnets that drew them to the store. Nearly 65% of all advertising that made women decide to go to a department store was for women's apparel in 1990, up from 42% the previous year.

Women's apparel was also the promotional thrust at Sears, JCPenney and Ward in 1990. Roughly 63% of people who shopped at a mass retail outlet said women's apparel was the reason they had come to shop, up from 43% in 1989. The strongest surge in traffic building strength came from women's blouses/shirts which more than doubled over 1989.

Mass merchandisers were also similar to department stores in domestics. Like department stores, mass merchandisers sharply decreased 1990 promotions of sheets, comforters and bedspreads.

The changes in brands consumers sought on promotion in September 1990 as compared to October 1989 are indicative of just how powerful promotions by high recognition brands can be. Brands which do not appear in one year's results can top the charts the following year, especially when the maker is large enough to work with a broad base of chains in a cooperative advertising program.

Procter & Gamble's Tide laundry soap, for instance, was far and away the promotional brand leader in the 1990 study due to extensive advertising by both the retailer and the maker. Several special promotions were in effect when the interviews were being conducted.