“There are more players that sell food than ever before, and that requires us to be constantly evolving and providing a better shopping experience for our customers,” says Erik Keptner, executive vice president for marketing at the US division of Royal Ahold, Stop & Shop’s Dutch owner. “A better shopping experience often means a more personalized shopping experience — and we have the means to do that.”
As the largest chain in New England, and one in which the vast majority of purchases are made using a card, Stop & Shop has a rich database of customer shopping information. That gives it a big advantage in the grocery store wars.
In September, I visited a Stop & Shop in Norwood for a firsthand look at what the card can do. Wegmans doesn’t make much of its loyalty card in the store, but Stop & Shop’s version gets top billing here. There are signs about how to double your savings with it, how to make money for your local schools, and how to get cheaper gas — for every $100 customers spend, they get 10 cents off each gallon at store-owned stations and participating Shells. “We really hope that our guests that have a Stop & Shop card see it as one of the most valuable cards in their wallet,” says Joe Kelley, the chain’s recently appointed New England president, who notes his wife recently saved $1.50 a gallon.
Kelley, a 46-year-old Massachusetts native who left the CEO post at Indiana’s Marsh chain for this job, arrived at an exciting time in the transformation of the company. Years ago, fighting the impression its prices were too high, Stop & Shop started mining loyalty-card data in service to its Value Improvement Program, or VIP.
“We literally lowered thousands and thousands of prices,” Kelley says. In order to do that, the company also stopped carrying many items it knew its best customers didn’t buy very often.
This idea was something akin to a retail revelation: A successful grocery store no longer need carry everything for everyone, just everything that each particular store’s top customers like to buy.
The researchers who studied the data of that anonymous East Coast supermarket found that Walmart took especially valuable customers, including those with pets or kids. Those groups spent so much that if the supermarket had retained just 10 percent of them, its $250,000 in losses would have been cut by more than 60 percent.
“Why didn’t [the supermarket] know that? Why didn’t they do anything before Walmart came in?” asks Song, the Burlington analyst. “The question today is: ‘Do I know this 10 percent?’”
Stop & Shop does. So when it renovated this Norwood store several months ago, the line of natural and organic food its top customers really like was expanded and moved up front. Before its recent renovation in Hyannis, the company learned that people there wanted really wanted convenience, so that store got fewer shelves of organic goods and more cases of prepared foods. When Stop & Shop renovates a store now, it chooses the main design from a pool reflecting not geography, but shopper preferences, Kelley explains. “We’re almost to the point where we can do store-specific [layouts] — that’s really where we want to get.”
As it works toward that goal, the company already has a tool that can pretty much personalize any of its stores. At the front entrance in Norwood, just below a flat-screen TV advertising weekly specials, is a row of hand-held scanners called ScanIt! When customers scan their loyalty cards and start shopping, the device mines their buying history to generate personalized mobile coupons they can use on that visit.
The hand-helds work extremely well, which helps explain why their maker, Quincy-based Modiv Media, was bought in April by Catalina Marketing, a data-mining giant based in Florida. Catalina tracks the purchases of 90 million households, about 75 percent of US shoppers, and then uses its data to produce personalized coupons cashiers give to customers after they pay. Catalina machines print up $6.5 billion worth of them a year, and they’re eventually redeemed by up to 25 percent of shoppers. But because the mobile coupons are displayed while people are making decisions in the aisles, they can achieve redemption rates as high as 60 percent.
Last year, Stop & Shop also began deploying a free app version of the device, ScanIt! Mobile, that converts customer smartphones into scanners. Some of the coupons, which pop up on your phone with a “ka-ching” sound, are based on your location in the store (you could get one for Coke while reaching for Pepsi), and some on what you’ve already put in your cart (like one for hamburger to go with the buns you just scanned).Continued...