Retailers on Quest to Rekindle the Personal Touch of a Bygone Era

In days of yore, retailers knew their customers. Sales clerks sent invitations to store events, called when items of interest arrived and had Rolodexes crammed with notes about shoppers' favorite brands and styles. That style of shopping -- an intimate experience, not an anonymous one -- has long been thought dead, driven to extinction by the invasion of the big-box retailer. But now retailers are hoping to recapture some of the old magic.

They're doing so by updating and expanding loyalty programs, which once rewarded shoppers only for frequent purchasing, and by offering locally relevant marketing and merchandising. "We've got a highly educated consumer who is probably more demanding than she's been in the past," said Martine Reardon, VP-marketing at Macy's. "She wants to go to a retailer that understands her, is really relevant to the lifestyle she's living, and really does pay attention."

My Macy's, now in its third year, seeks to be more relevant to consumers by stocking shelves with items popular in local markets -- Elvis Christmas ornaments in Memphis, Tenn., and electric pizzelle presses used to make the Italian cookie in Parma, Ohio, for example.

The program also extends to marketing. Events celebrating the Kentucky Derby have been held in advance of the race at Louisville, Ky.-area stores. And big wins for local sports teams are recognized with ads in the hometown newspaper. This month, Macy's Star Beach Party program will launch in Chicago, targeting college students from 10 area campuses including Columbia College, Northwestern and Loyola. The program pairs texting and pop-up events to lure students shopping for spring break fashions and, eventually, interview suits, the retailer hopes. The program was conceived by a regional executive who saw an untapped audience of 65,000 college students, a Macy's spokeswoman said.

Meanwhile, Food Lion has launched My Food Lion, inspired, in part, by My Macy's, said Cathy Green, president of the Food Lion family of banners, during a recent National Retail Federation conference. The program allows customers to create a profile personalized with relevant specials and recipes.

Worth noting: My Macy's and My Food Lion are separate from those retailers' loyalty programs, Macy's Star Rewards and Food Lion's MVP Card. The former focuses on understanding the customer and delivering desirable products and information, Ms. Reardon said. The latter is meant to reward customers for frequent shopping.

Retailers are also getting savvier about how they use customer information. PetSmart uses its database of email addresses to send out targeted emails with editorial content, as well as coupons. A recent note to reptile owners who typically buy crickets extolled the virtues of worms, included a link to information on reptiles and provided a $2 coupon for any live worm purchase. "Crickets are an important part of a reptile's diet -- but did you know that worms are an even better source of energy?" the email said. "Come on in and ask a store associate to help you design a diet that's just right for your reptile."

Likewise, Sears Holdings has overhauled its loyalty program in the past two years, morphing it into Shop Your Way. The program, which rolled out nationwide in November 2009, now counts more than 50 million members. Shoppers earn 10 points for every $1 spent in store or online and get access to bonus offers and prizes, as well as perks, such as the ability to return items without receipts. The program is cost-effective and gives Kmart and Sears the opportunity to build a robust database of consumers.

"The spectacular growth of Sears' Shop Your Way program is testimony to the ongoing power of a very simple, classic idea: rewarding loyalty based on customer behavior," said Lawrence Kimmel, CEO of the Direct Marketing Association.

More robust databases and better targeted communications will go a long way toward helping retailers recapture the magic of retailing days past. But it's not easy or simple. In the fall, Macy's sent out a mailing with upward of 30,000 different versions. Using information gleaned from its database, the retailer varied the page count and the items promoted. The catalogs varied in size from 32 pages to 76 pages, featuring additional pages of shoes for footwear fanatics or children's clothing for moms.

"What we tried to do was really customize (catalogs) to what the customer is really looking for and her past behavior shows she might want," Ms. Reardon said. "I still have circles under my eyes from it. It was pretty resource intensive. But we learned a lot, and we are going to do similar things in the future."

(Source: Advertising Age, 02/14/11)