As the economy gets tighter, discount retailers are finding that customers are more price-focused, and are targeting their marketing messages to address this issue through circulars, coupons and the Web.
Target, for example, is focusing its slogan, “Expect more, pay less,” to emphasize the “pay less” aspect. The retailer is specifically using marketing messaging that shows its prices and highlights price matching with Wal-Mart.
“We want to make sure that people know that our everyday prices are competitive and are highlighting this in our weekly circulars and in end-cap displays,” said Lena Michaud, spokesperson for Target.
Last week, Target Corporation reported net earnings of $602 million for the first quarter of 2008, compared with $651 million in Q1 last year. However, while overall sales were down from last year, April sales rose. In the four weeks that ended May 3, the retailer reported a 9% increase, to $4.3 billion in total sales from $3.9 billion for the four weeks ended May 5, 2007. On this same basis, April comparable store sales increased 3%.
In its co-op mailings with partner Valpak, Wal-Mart has increased its marketing efforts and has been focusing its messaging on price. “Consumers are trying to find ways to save money and stretch their dollars, and discount retailers are responding by pushing low prices,” said Amy King, VP of business intelligence and marketing research at Valpak. “We have seen Wal-Mart specifically pushing price in its marketing message.”
Sears and Kmart, other Valpak clients, are also tugging at tightened purse strings with coupon offers.
“For the first time in 16 years, coupon redemption is up,” King noted, despite lagging returns on other print material.
According to Dave Hendricks, EVP of operations at Datran Media, discounters are actively launching “winback” campaigns online.
“Retailers are sending out promotional messages to their inactive customers more than ever before in an attempt to win them back,” he said. These retailers are using e-mail, search and social marketing. “Reviews are especially important as consumers become less trusting in vendor claims and are looking for verification.”
Data is key in the weak economy and, regardless of the channel, marketers are focusing on using data to send more targeted messaging.
“All retailers are struggling, even the discounters,” said Greg Bogich, VP of new account development at Valassis. “But marketers have more data today, and that helps to send more targeted messaging in these hard times.”
But not all marketers are changing marketing efforts. “We really haven’t done too much to change our marketing efforts since the economy has turned bad,” said Josh Braverman, public relations manager at Family Dollar. “Even in a thriving economy, we have always maintained our low price points. What people already know is that we have good prices.”
The North Carolina-based variety store chain saw strong sales in April and reported a 7.2% increase to 516 million in net sales for the compared with $481.3 million for the four-week period ended May 5, 2007. The company expects that comparable store sales in the May period will increase 0% to 2%.
“I’m not sure that you can say more people are shopping with us since the economy has gotten worse, but business is solid,” Braverman added.
