ReportersNotebook — Consumables, 5/2/11
SUPPLIER NEWS — Frito-Lay is spicing up its Doritos, Fritos and Ruffles brands to include a Tapatio hot-sauce-flavored product. All three products include a unique combination of red chili peppers, spices and a hint of garlic — the same ingredients in the Tapatio hot sauce recipe. They are available at in small bags (99 cents) and large bags ($2.99).
Mars Chocolate said its Kudos brand debuted a new and improved line of granola bars this May. Kudos will don flavors from M&M’s, Dove and Snickers in a 10-count pack ($2.99) and a 30-count variety pack ($6.99).
Coca-Cola has developed 100% recyclable stand-alone display racks, dubbed Give It Back racks. The racks currently are being tested in select markets and are expected to become widely available in late 2011. “Coca-Cola is asking grocery and convenience stores to join our sustainability efforts by returning or recycling our racks, just like we ask consumers to return or recycle our product packaging,” said Gary Wygant, VP business development of Coca-Cola Recycling.
EXECUTIVE NEWS — Kraft Foods announced that its EVP and CFO, Timothy McLevish, will leave the company in mid-2011. McLevish will shift his CFO responsibilities to EVP operations David Brearton. Kraft said it has initiated an external search to fill Brearton’s current role as EVP operations.
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CVS clusters convenience, fresh in Urban concept
CVS provided a healthy dose of convenience to urban dwellers with the opening of its Urban Cluster store concept late last year. The stores have a decidedly unique bend, being stocked with a broad range of consumables, including an expanded pantry offering and a selection of affordable wines priced under $7.
The Grab & Go prepared foods — an array of prepared sandwiches, salads and fresh fruit individually wrapped for sanitary purposes — are just what the doctor ordered for on-the-go consumers. The section also includes such healthy beverages as Muscle Milk and Zico coconut water. A large cooler section houses deli meats, cheese, frozen foods, yogurt, soda and beer.
The expanded consumables section has been moved to the left side of the store to be near the door — a prominent location that makes the section impossible to overlook and easy to access. Plans call for an expansion of the concept to 300 of CVS’ 7,100-plus stores by the end of the year, according to company spokesman Mike DeAngelis.
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Are coupon ‘extremists’ bad for business?
Call it “the attack of the coupon-crazed shelf sweepers.” It’s the most aggressive form of bargain hunting by consumers willing to spend hours searching out coupon deals, to stock up with enough product to last their families for a year and to turn their homes into veritable warehouses.
And though it’s only practiced by a relative sliver of the shopping public, its impact has many top merchants scrambling for new ways to curb the worst excesses of the coupon warriors without alienating loyal coupon-using customers. It’s a real problem, creating inventory management chaos, confounding the customer experience and threatening to drive already razor-thin margins even further down.
Still, many retailers are reluctant “to do anything that’s going to cause any major challenges to real couponers, or frankly even coupon queens or kings,” observed Bud Miller, executive director of Coupon Information Corp. “Active couponers are fine, … and people should be encouraged to maximize their savings with coupons. But you should be able to do that for a small amount of product, not for 2,000 units of something.”
The trend has spawned a cable network show on the TLC channel called “Extreme Couponing,” and a cottage indus- try of online bloggers and webcasters who share their secrets for wringing sometimes astonishing discounts out of retailers forced to honor the generous terms of multiple, “stacked” coupons issued by retailers and manufacturers.
The rising popularity of the show and the explosion of online sites — like The Krazy Coupon Lady, Coupon Connections, MomsNeedToKnow.com and Fabulessly Frugal, all of which offer testimonials and lessons in aggressive coupon redemption — attest to the growing appeal of extreme coupon use. They also underscore the relative ease by which the most dedicated Web-savvy consumers can marshal the print and online coupons they need to pay pennies on the dollar for some promotional items.
“What I fear is that when people see these shows, they’ll get unrealistic expectations, and they’ll start breaking the rules. It raises unrealistic expectations,” Miller asserted. “It’s encouraging cheating, bad behavior and definitely encouraging greed. And it’s so divorced from how coupons really work.”
CIC, a not-for-profit association of consumer product manufacturers aimed at fighting improper coupon redemption and fraud, has gone on record expressing its “great disappointment” with the TLC program, calling it unrealistic and inaccurate.
One big problem with extreme couponing is “how it’s affecting the availability of product for other customers,” said David Fikes, director of consumer affairs for the Food Marketing Institute. “When someone comes in with coupons and just wipes out a whole shelf of product, that’s not … proper use of couponing.”
In light of that impact, Fikes said, “several companies are revisiting their policies on coupon use.” FMI member companies are not “challenging peoples’ right to do this,” he added, “but rather looking at, ‘How can we keep this from impacting our other customers in a negative way?’”
Most supermarket retailers are deferring to their store managers “to be the one to ultimately make the call” on whether or not a particular consumer’s use of coupons is “a fair use of coupons,” Fikes said. And most company policies regarding coupon use “already have that caveat within the framework,” he added.
Such is the case with companies like Target, Publix and Safeway. “Different stores are handling it different ways,” Fikes said. “For instance, when the same coupon has been clipped from the same stack of flyers, that’s when they start to draw the line [against a] mass clipping of coupons. And some retailers have decided to set geographic limits as to what constitutes a competitor. They’re not going to honor a competitor [coupon] from California if they’re in New Jersey.”
Target, for instance, specifies in its updated coupon policy that it will accept only Target- and manufacturer-issued coupons [one each for the same item], and “can’t accept coupons from other retailers, or coupons for products not carried in our stores.” The chain also may reduce the amount of the coupon “if it exceeds the value of the item after other discounts or coupons are applied,” according to the statement.
“First and foremost, our message is we want all our guests to have a great experience at Target, coupons or not,” said Target spokeswoman Erika Winkels. While “the vast [majority] of Target’s guests use coupons the way they’re intended,” Winkels added that the company is “continually educating our team members and our cashiers on … properly processing those coupons.”
The extreme couponing craze — accompanied by a rash of coupon redemption scams and calls for a more consistent approach — also prompted Jacksonville, Fla.-based Publix to launch its first formal coupon policy May 23. The policy limits the number of coupons that can be used on the same item, as well as the type and relative distance of competing stores whose coupons Publix will now accept.
“We’ve definitely seen more extreme couponing,” said Publix spokeswoman Maria Brous. “It varies from store to store; it’s not in every single store by any means. We have 1,036 locations [852 of which include pharmacies], and there are several stores that experience high coupon redemption and extreme couponing. But even in our formalized coupon policy, we talk about reserving the right to limiting quantity.”
The reasons are obvious. “We don’t want our shelves wiped off, because if they’re wiping off our shelves, we can’t be serving our customers who are in the stores every day,” Brous explained.
Aggressive coupon warriors who sweep shelves of product also throw any retailer’s scan-driven reorder systems and restock forecasting capabilities into chaos. “Even on automated replenishment, it’s taking into account a history of what’s taken place, and there’s not all of the back stock to be able to account for the rarity of somebody coming in to clean off the shelf,” Brous said. “That’s why we’ve held on to the right to limit quantities, so that we could try to protect the integrity of that shopping experience for all of our customers.”
Even with the change, she asserted, “When you hear about bloggers talking about [Publix], … we still have one of the most liberal policies in our sector.”
Safeway says its coupon policy “does not allow a customer to redeem two or more manufacturer coupons against the same item in a single transaction,” and the company reserves the right to refuse any coupons at its discretion.
“We’ve never allowed coupon stacking,” said Safeway spokeswoman Teena Massingill.
Some manufacturers also have “started adding limits on the number of coupons you can use per shopping trip,” added Miller of CIC. For grocery retailers, in particular, the damage wrought by the most aggressive couponers goes beyond their impact on other customers.
“In the best of times, grocery margins are very thin,” noted Susan Viamari, editor of Times & Trends for SymphonyIRI Group. And in the post-recession era, she added, “we’re in a very, very competitive environment” with “high levels of promotional activity and aggressive pricing strategies in play. So it’s really not the best of times, and we have these thin margins that are already being squeezed. When you add coupons on top of that, it’s got to be a pretty frightening phenomenon.”
“The fact is 48% of consumers say coupons heavily influence their brand decisions. So there’s a danger in not having coupons as well because there is a lot of trading going on,” Viamari added. “And 38% of consumers say they would give up some of their favorite brands to save money. It really does have the potential to redefine the marketplace.”
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