June 11, 2020

Unprecedented Times Prove Retailer Circulars Remain a Powerful Engagement Tool

By Karen Law
Categories

A common misconception is that print circulars are not popular, but this tried-and-true workhorse of grocery marketing reaches more households each month than the number that watched the NFL championship game. More than 8 in 10 shoppers frequently check circulars for weekly grocery deals,1 and an estimated 117 million households receive them via RetailMeNot Everyday™ Direct Mail each month.

What makes these weekly store circulars so compelling for shoppers? And how can retailers best deploy them? Here are some insights on circulars and why sticking with them is so important for grocery stores — and their bottom lines.

Consumers Look to Circulars When Planning Their Shopping

Weekly circulars are a key driver of shopping decisions as 66% of consumers study circulars, promotions, and discounts before they go shopping.2 In fact, research shows that 87% of shoppers read circulars the same or more than they did a year ago (+5 percentage points vs. 2019).2 When deciding where to shop, 74% of shoppers consult their grocery print circular to look for lower-priced specials, with 62% comparing prices between multiple store circulars (+13 percentage points vs. 2019).2

In a busy world, shoppers use circulars as an opportunity to view brands and prices from competing grocers with ease. Print materials, like circulars received in the mail, take 21% less cognitive effort to process than digital marketing, which makes them an excellent fit for consumers who already have short attention spans and too much information. That might explain why the majority of people sort through their mail immediately upon retrieving it from their mailboxes.3 New research shows that 37% of consumers are more excited now for mail deliveries than they were before the pandemic, while 30% report they’re spending more time reading the mail now than pre-coronavirus.4

The pantry stock is once again restored, and it has the potential to leave an impression for years to come. Therefore, the need to advertise assortment is key to becoming a one-stop shop. Now is one of the best times in recent history to use direct mail to do just that.

Circulars Help Consumers With Their Changing Shopping Needs

Consumers have shown they will adjust their shopping habits in response to unanticipated life circumstances. Just a few months ago — before COVID-19 — the average customer visited 4.1 different stores. Now, most consumers shop at 5.1 outlets.5

Most staggering, 3% to 4% of U.S. grocery spending was online before the pandemic; at the height of the pandemic, online grocery sales increased to between 10% and 15% of total grocery sales.6 The products customers research don’t just fall into their laps, of course. Shoppers are planning shopping lists in advance,7 and 40% of online grocery shoppers consulted printed circulars at home to look for deals and offers.2

Shoppers are changing stores, but will they come back? Fourteen percent of customers have switched to a new primary store during the crisis, and 48% plan to continue shopping at their new grocery stores once the pandemic ends.8 The main reasons cited were too many out-of-stock items, the proximity of retailers to home, better e-commerce and delivery services, cleanliness/safety concerns, and more affordable prices. In fact, 82% of shoppers will change the stores they shop at to take advantage of weekly specials.9 These statistics suggest that shopper loyalty only goes so far.

Many retailers are doing whatever they can to help mitigate the spread of the virus while accommodating their shoppers. However, it is important to not only be ready but also to be adept at figuring out how to operate in the new normal when the world shifts back. The need to reclaim market share will be huge, and creating excitement related to in-store shopping will be vital given the increase in online consumption — benefiting the retailers with deeper pockets and larger delivery infrastructure.

A recent Valassis survey found that 84% of consumers appreciate the way some brands have changed their advertising and tone due to the coronavirus pandemic.4 Some retailers might want to advertise what they DO have in stock — via email, display ads, or dynamic mobile — to prepare customers and avoid unnecessary disappointment.

The complexity of local and state variances poses a challenge for retailers, however. Valassis is using location data to track visitation to help adjust messaging and creative at a neighborhood level to respond in real time with digital that can also complement the circular. As a result, consistent omnichannel communication from retailers through advertising messages is crucial for staying top of mind with customers and maintaining sales.

Circulars Are a Big Investment With a Significant Return

Grocery circulars often account for the largest share of a grocer’s marketing budget because they are an effective marketing vehicle. Although 60% of shoppers prefer to receive their circulars in a print format,2 grocers who needed to make cuts saw these printing costs as a prime target. While this might save money in the short term, the evidence paints a clear picture that the loss in sales could wipe out those savings. Cutting back on advertising during a recession can cause long-term consequences — it can take as long as three to five years to recover equity losses after going dark for extended periods.10

The competition is evolving, and the landscape continues to change. As a result, eliminating the circular is a risky bet. Reducing your grocery circular budget by even 5% could end up shrinking your bottom line due to lost sales that you can’t regain through other media.

For a moment, consider what this could mean to a grocer’s bottom line. Valassis performed an analysis to measure the impact of trimming circular distribution. For a chain with a circulation of 10 million circulars each week, reducing circulation by 5% could translate into a loss of 500,000 households. If only 10% of these customers spent $40 during one trip to the store, a chain would experience a loss of $2 million each year if its customers went to competitors. This is only a fraction of the potential losses that could occur.

By arbitrarily removing circulation, grocery chains could be chasing away some of their most valuable customers. Stores that fail to put out circulars risk losing customers to those that stick with the proven format.

The Need for Information Is Never-Ending

With consumer attention more fragmented than ever, having an “always-on” marketing strategy that regularly reaches and influences consumers is crucial. Direct mail is one way to do that, and that may be why 70% of the grocery ACV relies on direct mail to distribute weekly grocery ads.11

Regardless of the source, consumers need information. The COVID-19 pandemic has turned almost every aspect of our lives upside down. In a recession environment, shoppers seek out circulars, coupons, and promotions to help stretch their dollars. This is not the time to pull back on grocery circulars as consumers become casual shoppers, forgoing retailer loyalty in the pursuit of fulfilling their family’s food needs. Maintaining a “share of mind” is more important than ever to mitigate the risk of losing current and future sales.12

Grocery circulars are a tried-and-true advertising method, and they need to be included in any viable omnichannel approach that keeps the right buyers in the know at a time when the value of remaining informed cannot be overstated.

Valassis’ Intent Engine improves engagement and continuously optimizes to streamline your advertising approach. To learn more about how Valassis can help you with your inserts, click here. Or contact us to start a conversation.

Sources:

1. Market Track Survey, Q1 2018
2. BrandSpark 2020 US Shopper Study
3. MSP, “10 Direct Mail Marketing Statistics That Will Surprise You,” March 21, 2019
4. Valassis Consumer Behavior and Media Consumption Survey, fielded the week of April 27, 2020
5. Kantar Commerce Snapshot Wave 1, fielded April 3–7, 2020
6. Steve Caine, Bain & Company research, 2020
7. Path to Purchase IQ, “How Brands Should Adjust Their Marketing for the Pandemic,” May 26, 2020
8. McKinsey & Company COVID-19 US Consumer Pulse Survey, fielded May 18–24, 2020
9. 2K19 Valassis Coupon Intelligence Report
10. Nielsen ROI Norms Database, WARC, “What we know about advertising in a Recession,” Bain & King
11. Valassis 2019 Direct Mail Package revenue aligned with AdAge200 Leading National Advertisers, Trade Dimensions and Retailer websites for sale break date
12. Forbes, “When A Recession Comes, Don’t Stop Advertising,” Sept. 5, 2019

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