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CSP Tech: Busting the Trade-Dollar Pinata

By Angel AbcedeSenior Editor/Content Development Coordinator, CSP
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For years, convenience-store operators have had a cordial relationship with consumer packaged goods (CPG) manufacturers and other suppliers on promotional deals to help drive sales and turn inventory. That friendship may heat up as mobile commerce unlocks what could be a floodgate of additional trade dollars.

The ticket: digital coupons.

“Until now, most of those dollars have gone to grocery, drug and mass,” Van Otterloo says. “This is opening the door to a chest of additional promotional funds that has been available for years.”C-stores have always had problems handling paper coupons, says Brad Van Otterloo, vice president of client dvelopment for Koupon Media, Dallas, which has issued 400 million digital offers from 30,000 retail locations in four years. The paper-based-coupon infrastructure is costly, laborious and inefficient, clearly outweighing the benefits for c-stores, he says. Supermarkets, mass merchants and drug stores are all too familiar with a coupon-toting shopper stalling lines and the time involved in staff handling paper. But the proliferation of mobile phones has given the channel a way to bypass paper, paving new inroads to promotional trade dollars.

In 2014, less than 10% of total coupon redemption occurred in the c-store channel, according to online-statistics portal Statista, New York. Manufacturers distributed more than 310 million CPG coupons in 2014, with nearly half of those redeemed in grocery, despite c-stores outnumbering grocery stores 3-to-1 in the United States, say officials with GasBuddy, Gaithersburg, Md. With digital couponing, c-stores can now bring thousands of their locations into the equation.

Those elements are not the only hot potatoes in play. Another flammable piece is what Van Otterloo calls “attribution.” For years, CPG companies had no true way of knowing if marketing dollars turned into actual sales; money went to overall promotions, with nothing tied to actual clicks and redemption tied to a banner ad, YouTube video or manufacturer-sponsored articles. New York-based Nielsen released numbers showing that as much as 67% of all trade dollars were not effectively spent. (See sidebar at left.)

Though Van Otterloo believes c-stores are moving faster on mobile couponing than other channels are, they’re still in the early stages of experimentation and adoption.

For tech-savvy chains such as Waycross, Ga.-based Flash Foods, digital coupons are just now becoming a reality. The 170-store chain has spent several years developing its loyalty platform, which grew into a mobile app and mobile payment option in 2013, according to Jeannie Amerson, advertising and loyalty manager for Flash Foods. Building the technology, processes and training into the company’s DNA was a massive undertaking.

After a year of development on the back end and negotiations with a tobacco manufacturer, the company this summer started an in-field test of digital couponing within the Flash Foods mobile app that includes coupons for age-restricted items, Amerson says. And she sees more to come: “We are now able to push notifications and coupons that are relevant to loyalty customers based on their purchasing habits. More importantly, we have the opportunity to engage with our customers outside of the store environment and change their shopping behavior.”

Consumers seem open to what chains such as Flash Foods hope to offer. According to a recent GasBuddy survey, 81% of its members would be influenced to try a product if a digital coupon appeared on their app. Also, 76% of those polled say digital coupons would affect their decision on where they filled up (if the price of gas were the same).

Moves into digital couponing may also prove to be a survival tactic for c-stores in an increasingly competitive retail landscape, with one of the biggest concerns being online shopping and home delivery—estimated to be a $25 billion business in the United States, according to Willard Bishop. Amazon, Walmart and Overstock.com are emerging as real threats, while localized programs are bringing restaurant meals, liquor-store purchases and even emergency sundries to consumers’ doorsteps in little time at all.

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