Retail deals with its circular problem

Discussion
Mar 16, 2015

With digital coupons continuing to underwhelm and newspaper readership shrinking, retail continues to have a circular problem.

A Wall Street Journal article last week chronicled the many challenges facing digital advertising, including the ineffectiveness of banner ads and the fact that search ads only work when shoppers have specific targets. E-mailed coupons often wind up in junk folders.

Wanderful Media, which operates digital circulars for 400 newspapers and runs the Find&Save mobile app, told the Journal that fewer than one percent of consumers who read newspapers online click through to digital circulars embedded in the website while 80 percent of newspaper readers look at the circulars inside.

A survey last September from the Newspaper Association of America found that 70 percent of people usually check newspaper inserts to find out about sales, with 48 percent agreeing it was "easier to browse through ad inserts that interest me than to search through the Internet for the same information."

The challenge is that newspaper readership continues to erode. In many markets, digital advertising doesn’t make up for the loss of local fliers when a local newspaper shuts down.

Mobile apps — either with circulars from individual retailers or aggregate coupon sites such as coupons.com — could potentially replace print circulars and possibly enhance the experience with location-based technologies.

According to a survey of 11,000 mobile users last year from mobile shopping app, Retale, and location-based analytics company, Placed, 74 percent of respondents reported having looked at a circular in the last 30 days. Of those who did, 49 percent viewed a circular on a mobile app and 56 percent viewed it on a website.

About half (53 percent) had downloaded a mobile app for a specific retailer while over 31 percent accessed digital circulars using a mobile app that aggregates the weekly ads of multiple retailers, with a whopping 79 percent of those who use mobile aggregators citing "convenience" as the basis for this preference.

Still, some lukewarm answers came from the roughly half who hadn’t used a digital circular.

"Circulars are like crack," Corey Elliot, the director of research for Borrell Associates, a market research firm, told the Journal. "It’s hard for retailers to walk away from them, because they are ingrained in how people shop."

How long will it take for digital circulars to sufficiently replace newspaper circulars? What are the more and less obvious barriers inhibiting shoppers from shifting from newspaper to digital circulars?

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29 Comments on "Retail deals with its circular problem"


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Tony Orlando
Guest
7 years 2 months ago

Newspaper circulars will be around for quite some time and digital will grow as well. I don’t believe that digital is the answer to everything as some others do, and newspaper ads are not going up in price which helps retailers looking to strike a bargain. In rural areas like mine, print still is very strong, as many Boomers do not own a computer and rely on print for their deal shopping. Both can coexist quite nicely, and retailers are using both medias to make sure they reach their target audiences.

Paula Rosenblum
Guest
7 years 2 months ago

Our research has shown us that digital marketing hasn’t really matured in the retail enterprise. It doesn’t necessarily report to the right person, and metrics (which should be straightforward) are very unclear.

Plus we were able to see firsthand when JCP stopped running print circulars (FSIs) how sales tanked.

It’s going to take a few years and a continued generational shift before digital marketing can replace the circular. The Millennials have to be fully engaged in their peak discretionary spending years and retail organizations will have to rationalize their marketing organizations.

Then it’ll follow its natural evolution to digital, I think.

Still, it’s funny that we talk about iBeacons and personalized marketing when it appears the non-personalized generic circular still has power.

Fascinating.

Max Goldberg
Guest
7 years 2 months ago

Retailers need to make it easier and more valuable for customers to use mobile. Consumers should be able to clip coupons from any site and automatically bring them to a retailer’s app. That app should be linked with the retailer’s loyalty program. At checkout the consumer should call up the app and wave the phone at an NFC terminal to obtain the coupon savings, get loyalty points and pay. It’s not a matter of making circulars more mobile-friendly, it’s about changing the shopping experience.

Chris Petersen, PhD
Guest
7 years 2 months ago

Perhaps the circular conundrum is the assumption that today’s omni-channel shoppers still respond to coupons and ads in the same way as in the days when print dominated retailer advertising.

Corey Elliot absolutely nailed it with his statement: “Circulars are like crack … it’s hard for retailers to walk away from them.”

Corey Elliot missed the boat with his statement: “[Circulars] are ingrained in how people shop.”

Omni-channel shoppers can now check multiple sources before purchase. One of the most powerful and most used online sources are the price comparison websites, including the pervasive Google which serves up the best prices and offers on any product researched.

Jason Goldberg
Guest
7 years 2 months ago
No question that FSI/circulars are sacred cows for retailers, but their effectiveness is much more murky than implied in the Wall Street Journal article. In his book Freakonomics, Steven Levitt, a professor of economics at the University of Chicago, includes a case study in which a retailer accidentally turned off circulars in one market (Pittsburgh) and saw no decline in traffic. You can’t test a tactic like FSI without evaluating the quality of the execution—the creative and the targeting. Part of the problem is the inconsistent success criteria used between digital and print. In the Wall Street Journal article they talk about the number of consumers that SEE the print ad, but the digital tactics have to drive actions like clicks and store visits. Add to this that we are really bad at online to offline attribution and I simply don’t think most retailers have enough insight to accurately optimize their marketing mixes. The bottom line at the moment is that good executions of digital, such as Target’s Cartwheel, can absolutely drive store traffic, and… Read more »
Dr. Stephen Needel
Guest
7 years 2 months ago

It will probably take my generation (Boomers) dying off for digital to replace newspaper circulars. Even though newspaper subscriptions are shrinking, I still see a number of people picking up the circulars at the front of the store and thumbing through before shopping (so reach is probably being under-reported).

Mark Heckman
Guest
7 years 2 months ago
Transition is always painful and sometimes even unprofitable. So it goes with digital coupons and digital circulars. While brands and retailers are motivated to migrate from paper to digital given the cost efficiencies and flexibilities of digital, the code has not yet been cracked as to how effectively engage shoppers. There are now over 20,000 retail stores nationally that support load to card or load to account coupons. The reach is nearly there for critical mass engagement. However the dearth of marketing, the lack of content and the lack of retail support (retailer’s own digital offers) have all contributed to disappointing results. Further, the same inherent advantages of digital (no clipping or handling at the register) often work against this new medium in that digital coupons are out of sight and sometimes out of mind compared to the visceral nature of the paper alternative. Digital circulars are making some headway in terms of creating a digital replica of the retailer’s ad. Technology has enabled list creation, filtering of items and offers, targeting and at-the-shelf messaging,… Read more »
Warren Thayer
Guest
7 years 2 months ago

Pardon me, but I’ve been hearing of the imminent death of print media for at least 15 years. And what this discussion misses is the variation in how people shop for milk, eggs, furniture, baseball gloves and baby highchairs. I always found the “effectiveness of coupons” discussions everywhere lacking in the recognition of that basic fact. But for what it’s worth, I’m in Tony Orlando’s camp on this one. No surprise there, I suppose.

Graeme McVie
Guest
Graeme McVie
7 years 2 months ago
The process of simply putting a print circular into a digital format doesn’t address the underlying issue of the relevance of circulars for shoppers and ROI for retailers and manufacturers. Retailers are aware that circulars drive customers to stores and also drive top-line sales but in numerous studies the overall performance of circulars in general is patchy with negative or break-even ROI being fairly common. Even in situations where the ROI is positive it doesn’t necessarily mean that circulars are the best use of finite resources. If retailers and manufacturers are looking to improve the customer experience and drive the best ROI then highly-targeted and fully-personalized communications have been proven to deliver the right combination of high response rates, incremental sales and very positive ROI. But this type of personalized approach requires a change of mindset for retailers and manufacturers who are very comfortable with the process of generating and distributing circulars. It also has to be said that for a portion of shoppers (and in some geographic locations, a majority of shoppers) circulars are… Read more »
Mohamed Amer
Guest
Mohamed Amer
7 years 2 months ago

Let’s not fall into the either/or trap. Each approach is appropriate for a different part of the consumer market and retail segment. That does not negate the fact that over time we have two separate trajectories here—growth in digital and an opposite one in print. And these categories aren’t mutually exclusive either.

Consumers will always be looking for deals. Doing so online keeps on getting easier and that in itself will accelerate digital’s adoption. Developing a more complete picture of the consumer combined with improved promotion performance tracking will help both brands and retailers make the digital/print investment allocation.

Ralph Jacobson
Guest
7 years 2 months ago

How long will it take for people to stop reading newspapers? When we Baby Boomers are finally gone. We are a stubborn bunch.

Shep Hyken
Guest
7 years 2 months ago

It doesn’t matter how long it takes, if ever, for digital circulars to completely replace newspaper circulars. What matters is that the retailer is able to promote, and the customer is able to receive, those promotions. They will come through multiple channels: newspaper, mobile, pay-per-click type of ads and more. Digital will eventually become the promotional vehicle of choice. And there will be channels we’ve not even thought of yet that will connect retailers’ promotions to consumers.

Cathy Hotka
Guest
7 years 2 months ago

I’m certain that one reason why digital marketing is relatively ineffective is its ubiquity. Why is an email from my favorite drugstore—you know who you are—going to stand out when I get one every single day?

And to Paula’s point, even with all the talk about iBeacons, I haven’t yet received a personalized offer—from any company. Maybe they’ll show up when personal hovercrafts hit the market.

Ryan Mathews
Guest
7 years 2 months ago

I think that, in the end, circulars may be fully replaced by mass customized loyalty programs. It only makes sense to assume people will continue to want discounts and retailers will opt to use media platforms with a higher probability of success.

Newspapers will continue to decline. The issue is, will the psychic space in the shopper’s mind formerly occupied by circulars be filled be digital circulars? I don’t think so.

Ed Rosenbaum
Guest
7 years 2 months ago

I am not sure digital circulars will replace newspaper circulars. Not as long as the current older generations still use newspapers as the primary source for advertising information. Yes, there will come a time. But that time is many years away. It will happen when those in their 40s and younger replace us in our somewhat “golden” years as the major shopping bloc, at least for food items.

Roger Saunders
Guest
7 years 2 months ago
Digital circulars will replace print circulars when enough consumer segments say they are willing to trade off the convenience of their printed circulars. However, that will not happen all at once. It will happen in stages. Retailers have to continue to consider: 1. The category of merchandise used for promotion, 2. The shopper segment they are attempting to influence, 3. The cost of media to deliver the appropriate ROI and 4. The media form that has been chosen for marketing purposes—if you’re not considering at least 30 different media forms, go back to school. Pardon me if this sounds like a page out of the book of Chicago’s department store merchant, Marshall Field, “Give the lady what she wants.” It’s a time-honored fact. “The consumer is not the village idiot”, as David Ogilvy said. “They are your spouse.” (Mea culpa for my political correctness in quoting an advertising giant from the ’50s/’60s) Digital coupons work better with different consumer segments. Direct mail has a stronger influence on purchase with Gen X than Gen Y. Advertising… Read more »
Tom Redd
Guest
7 years 2 months ago

It will be a long time before the digital generation steals my circulars. When the new Gen-? or “whoever-illennials” learn how to really use promos and when the marketing services that help retailers to promote coupons stops blasting too much to shoppers that just wanted a coupon, then we might see some shift. The digital coupon sites or services we have used at our house promote so much stuff that we do not want that we block their sites from the home server.

Keep my paper. It is the only sanity left is this over-automated, digital crazy, IoT world.

Li McClelland
Guest
Li McClelland
7 years 2 months ago

It depends. The items being advertised make a huge difference. I am confident that the firms selling primarily electronics, games and appliances will be able to convert to all or mostly digital ads somewhat sooner and with less resistance than say, drug stores or grocery stores.

I’m a Boomer and yes, I’m a fan of circulars and comparison shopping, and not a big fan of having my inbox and smartphone filled with useless coupons and unwanted shopping alerts from retailers who have managed to secure my email address.

John Karolefski
Guest
7 years 2 months ago

Old habits die hard. The Millennials will have to inherit the earth before digital circulars have a chance to be read.

Lee Peterson
Guest
7 years 2 months ago

This is a bigger issue in that consumers are bombarded now from every angle: print, online, social media, TV, Netflix, Pandora, oh my! (Sorry.) The result is, if you’re used to using print for coupons or deals, you revert back to your old habits because the former is just too confusing and duplicitous.

Just another case, IMO, for the old EDLP strategy. I mentioned this last week, but I was in a fantastic new Third Wave restaurant the other day and their pricing was listed as “6,” “4,” “3,” etc. Boy, does that work, no matter how many times you see it.

James Tenser
Guest
7 years 2 months ago

As the media sage Marshall McLuhan observed—new media displace (not replace) older media. In the world of coupons and offers, that means an evolving shift in the role of print due in large measure to the availability of frequent shopper programs and digital offer alternatives.

McLuhan stated further that displaced media eventually take on the status of “art forms” or even nostalgia when new media ascend. That may already be true. (Have you taken a critical look at a Trader Joe’s circular lately?)

Print circulars remain relevant for a segment of shoppers that may indeed be shrinking due to generational change. The balance will tilt, and the execution of print will evolve to match the changes in demographics, behavior and economic return.

Time-frame? For this particular transition: decades, not years.

Kenneth Leung
Guest
7 years 2 months ago

The key is going to be demographics and disposable income. The Millennials are much more digital and mobile savvy, but the bulk of the purchasing power in retail still comes from baby boomers who still react to circulars. When the purchasing power switches over to the Millennials, that’s when newspaper circulars truly would fade.

Camille P. Schuster, Ph.D.
Guest
7 years 2 months ago

Until the older generation who reads circulars out of a lifetime habit is gone, newspaper circulars serve a purpose. If there are some people just developing this habit, maybe they will hang on longer. Shifting to digital circulars is not a matter of just putting the same circular online or in a mobile format. Reading on mobile devices is not the same experience as reading through the pages of a circular. Therefore, to be successful companies need to rethink the “circular” and move in the direction of Ryan’s suggestion—personalized mobile promotions.

Ed Dunn
Guest
7 years 2 months ago

Circulars are here to stay. The presence of circulars at the front entrance of Publix/Kroger as well as displayed on the wall at the front entrance of Target is a physical interaction with the customer and a first impression on what deals are active in the store. Mobile/digital technology cannot make this kind of instant connection with the customer.

Mark Price
Guest
Mark Price
7 years 2 months ago

Circulars in general have a problem—a lack of incremental sales volume or transactions. Across the retailers we have worked with, circulars have been shown to drive little change in consumer behavior, but effectively rewards consumers for their preexisting purchase plans.

General, one-size-fits-all circulars are a holdover from the days of mass media and are often designed to obtain vendor marketing funds (which can represent a bulk of the profit from some retail organizations).

Personalization and prediction will be keys for success of digital offers, either through an app or direct to consumers through email. Personalization—offers just for me based on my interests and past purchases. Prediction—offers based on what I am individually likely to purchase using advanced statistical algorithms.

J. Kent Smith
Guest
7 years 2 months ago

Realistically, another 10 years. Not because customers, but because of organizational intertia. That being said, one wonders if the “green” movement will catch up with paper flyers. Yes, they are recyclable, but it still consumes trees and energy to create and distribute them. I think this is all a subset of a greater phenomena of how retailers connect with customers. Focused promotions on smart devices are here to stay, not only because they are cheaper, but because they are measurable.

Warren Thayer
Guest
7 years 2 months ago

At the end of the day (gawd, how I hate that little phrase), it all becomes clear: the instant poll shows 78% (7:15 pm, EST) saying they are NOT confident that digital circulars will replace newspaper circulars in the next five years. Sic transit gloria… whatever.

Martina Olsen
Guest
Martina Olsen
7 years 2 months ago

I don’t think they will replace them. What we see today is that consumers are shopping and interacting with brands across a range of channels, and as long as print exists there is an opportunity there for retailers which would be silly not to make use of.

That said there is definitely a shift happening towards digital, but at the end of the day retailers will always benefit from reaching their audience where they are, be it print, digital or both.

Danielle Barbieri
Guest
Danielle Barbieri
7 years 1 month ago

Great discussion. Until we get to Circulars 3.0 (1.0 being print and 2.0 being the same print ad slapped online), digital circulars will not cross the chasm. I see Circulars 3.0 as personalized, aggregated multi-store vehicles (gasp) that drive in-store traffic, basket size and new partnerships. Of course, I am biased here.

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