TRENDSMONITOR
VOL 05
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ISS 3
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M A R 2015
C
CONSUMER
TRENDS
Consumers Save $3.6 Billion by Redeeming
Coupons in 2014
by Mary Brouddus
Food and Non-Food Marketers Strategically use Media
Mix to Manage Coupon Value Increases
Valassis, a leader in intelligent media delivery, released
their annual topline view of U.S. coupon trends in 2014
prepared by its subsidiary, NCH Marketing Services, Inc.
Findings suggest that marketers strategically offered
consumers more coupon savings and managed the
redemption impact to their budgets.
Marketers of consumer packaged goods (CPG)
products increased the average face value offered on
their coupon promotions, primarily for those issued in a
free-standing insert (FSI) booklet. While both food and
non-food products increased their face values, only nonfood increased the total number of coupons distributed,
and subsequently received a positive redemption
volume increase.
The net effect was a 2.9% overall increase in consumer
redemption savings, up $100 million to $3.6 billion in
total for 2014.
AVERAGE FACE VALUES
Distribution
2013
2014
%Chg.
Food Coupons
Non-Food Coupons
All CPG Coupons
Total Dollars Offered
$1.00
$1.98
$1.62
$510
billion
$1.06
$2.05
$1.72
$533
billion
6.0%
3.5%
6.2%
4.5%
Redemption
2013
2014
%Chg.
Food Coupons
Non-Food Coupons
All CPG Coupons
Total Consumer Savings
$0.99
$1.68
$1.26
$3.5
billion
$1.00
$1.72
$1.32
$3.6
billion
1.0%
2.4%
4.8%
2.9%
FSI CPG Coupons
Non-FSI CPG Coupons
$1.63
$1.53
$1.74
$1.46
6.7%
(-4.6%)
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In an effort to work within 2014 budgets and still
deliver increased savings to consumers, marketers issued
a total of 310 billion CPG coupons, down 1.6% from the
previous year. Marketers achieved a total of 2.75 billion
coupons redeemed in 2014, down 1.8%, through a
strategic combination of media mix, product moves, offer
characteristics and retailer support.
Marketers reached consumers with their largest
allocation toward FSI coupons. Although digital coupon
distribution increased, it remains less than 1% of total
coupon distribution.
“FSI was 92.2% of total CPG coupon distribution
volume in 2014 because it is an efficient vehicle to reach
over 60 million households per week, affording marketers
the opportunity to offer increased value to activate
consumers,” said Curtis Tingle, Valassis chief marketing
officer.
Year-over-year variability in the products promoted
via coupons also affected the annual trends. In the nonfood segment, marketers distributed 3.5% more coupons
in 2014. This led to substantially more non-food coupon
redemption, which was up 11.4%, reversing a prior year
decline. Conversely, in the food segment, marketers
distributed 10.4% fewer coupons and redemption fell by
10.3% from 2013.
The overall reduction in food coupons had the largest
impact on retailers in the grocery and mass merchandiser
retailer channels, which experienced a 5.1% and 3.3%
decline in total redemption volume, respectively. The
increase in non-food coupons benefited the drug retailer
channel, which saw a 16% increase in total redemption
volume during 2014. The smaller “all other” retailers
channel, which includes dollar stores, also saw a similar
redemption volume increase.
“Marketers are managing their budgets to find the
right balance of consumer incentives,” said Charlie Brown,
NCH vice president of marketing. “At the same time, many
are also investing more in the analysis, controls and risk
mitigation areas that are required for coupons to perform
at their best.”
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CONSUMER
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12% of Shoppers Buy from Social Media Ads
by Courtney Huckabay Stone
Blueshift Research Trends Tracker asked respondents
about their purchases of products advertised on social
media sites, and found 12.4%, mostly Millennials,
purchase items through those ads. “Such purchases
were made primarily through Facebook (8.1%), followed
by Pinterest (1.9%). The daily 3 billion video views via
Facebook could push the market further.”
“Pinterest also is upping its number of ads, with a
more aggressive rollout of ‘paid-for pins’ and promoted
pins, which are expected to be more valuable than other
social media ads,” Blueshift reports. “The site also is
releasing more user data to allow better targeting for
advertisers. Twitter is taking a different approach at
gaining ad dollars by acquiring Niche, which connects
brands with growing social media stars.”
Blueshift asked: Have you bought any
products through a social media ad?
• 8.1% have bought a product through an ad on Facebook, and 1.9% have bought a product through
a Pinterest ad.
• 1.3% purchased through Instagram.
• Younger respondents are the most likely to buy a
product through a social media ad.
• 15.4% were aged 18-29.
• 13.8% were aged 30-44.
• Respondents with household incomes of more than
$150,000 and between $25,000 to $49,999 are the
most likely to buy a product through a social media ad.
• 13.9% of households with incomes between $100,000
and $149,999 bought products through social media.
AudienceSCAN finds that 32% of
Americans are social shoppers:
• 18.6% of U.S. adults said “to get deals and discounts”
when asked: “How do you use social networks (like
Facebook, Twitter, LinkedIn and others)?”
• 13.6% of U.S. adults said “to learn about new
products” when asked: “How do you use social
networks (like Facebook, Twitter, LinkedIn
and others)?”
They tend to have young children – 21% have kids
younger than 5. Also, 27% of this crowd lives in rural areas
or small towns. Since the majority of social shoppers are
women, focusing on activities they enjoy would be good
place to start with social media ads. This audience bakes
(55%), decorates (38%), crafts and/or scrap-books (37%)
and likes fashion (33%). Social shoppers are 112% more
likely than average shoppers to purchase daily deals and
83% more likely to buy products at or from a directselling party, like Mary Kay or Pampered Chef.
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CONSUMER
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42% of Millennials Think Private-Label Foods
are More Innovative
by Karlene Lukovitz
It’s no secret that store brands have seen explosive
growth in recent years, and a new Mintel report documents
that positive perceptions of these products have taken
hold among significant numbers of Millennials and other
consumers.
One interesting finding: 42% of Millennials (ages 18-36)
agree that store brand food products are more innovative
than name-brand products. In fact, Millennials are more
likely to buy store brand foods in general (97% versus 94%
of all U.S. shoppers).
Furthermore, 37% of U.S. shoppers as a whole say
they prefer to buy store brand products over brand name
products.
And in contrast to the old assumption that consumers
mostly “settle” for buying private-label brands for cost
reasons but view them as inferior, nearly two-thirds (63%)
of store brand buyers — including 70% of Millennials —
agree that these products are higher-quality than they
used to be. Many shoppers also agree that store brands
stack up against their name brand counterparts in flavor,
packaging and variety of product offerings.
“We’re seeing a shift in consumer thinking at the
grocery store,” sums up Mintel food analyst Amanda
Topper. “Name brand power no longer holds the most
weight. Quality, price and innovation are carving out a
larger portion of consumer mindshare.”
In addition to improved quality and product innovation,
nearly 70% of all store brand shoppers agree that they
trust certain store brands more than others, and 64% said
that once they’ve tried one store brand product, they are
likely to try others. Brand trust as a store brand purchase
driver is even stronger among Millennials.
What Drives ‘Private Label Lovers’
Mintel identified unique groups within the 94% of
shoppers who are private label food buyers, including
the “private label lovers” — consumers who seek
out products that are lower in price than name brand
products, but equivalent in terms of ingredients and
quality. Cost savings is a priority for these shoppers, “but
not at the expense of sacrificing quality,” said Topper.
Mintel reports that enhancing the quality, variety
and innovation levels of private label foods is key for
engaging with private-label lovers.
Functional packaging attributes are important to
store brand shoppers, including easy to open (35%),
resealable (35%) and easy to store (29%). Private-label
lovers would also like to see more products for the same
price (55%) and products made in the USA (45%).
“Along with a move toward healthier eating and
better-for-you foods, many private label food products
are focusing on clean labels, with easy-to-read
ingredients and product claims,” said Topper. “Store
brand shoppers are...seeking out products that list
ingredient they recognize, and feature prominent claims
such as ‘organic,’ ‘low/no/reduced’ or ‘made with
natural ingredients.’”
Nearly a third (30%) of adults who buy store brand
foods say that the “no artificial ingredients” claim is a
factor in purchase decisions.
Furthermore, the number of private-label food
products launched between 2009 and 2014 with a
‘low/no/reduced allergen’ claim has increased by
11.7 percentage points, and the gluten-free claim has
increased by 10.5 percentage points, according to
Mintel.
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MEDIA
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Big Money for Big Data: Marketers Will Spend
$11.5 Billion in 2015
by Al Urbanski
U.S. marketers will spend $11.5 billion this year on data
and related solutions, an increase of a half-billion dollars
over last year that will be fueled by more investment in
display ads and email. Spending in those two channels
combined will nearly triple, Winterberry Group’s Bruce
Biegel told attendees of a LiveRamp Summit in Santa
Clara. Specifically, data-related spending will rise by 35%
in email marketing and 21% in display, according to the
Winterberry study, which is built off a five-year-old model
of the marketplace and updated with input from marketing
industry executives.
It’s direct mail, however, that still commands the lion’s
share of spending on data-driven targeting. More than $9
billion of the 2015 total will go into perfecting mailing lists.
While ascendant, display and email each will account for
just over $1 billion in spending.
“Our analysis points to data’s increasing central role
in all audience engagement efforts,” said Biegel, who is
Winterberry’s senior managing director. “We believe the
time has come to update old models and to help our
industry peers understand the real distribution of dollars
across the three pillars of the data-driven marketing
economy—third-party information, data management
services, and platform technology.”
Direct mail merits the bulk of data dollars because it
continues to command a heaping share of overall marketing
dollars. Among all media categories in 2015, Winterberry
predicts direct mail spending will be $45.2 billion, second
only to television at $68.5 billion.
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Are Traditional Marketing Channels
Past Their Prime?
by James Jarnot
There’s a reason these oldie-but-goodies are still
around. Today’s brands are on an endless quest for the
latest, fastest, and sleekest marketing tools to make even
the most time-honored companies feel like agile, young
startups. But when it comes to local marketing, traditional
channels (e.g., coupons, radio, and Yellow Pages ads) are
keeping up with the digital and social whippersnappers.
In “The State of Local Marketing” report, local marketing
automation platform provider BrandMuscle Inc. analyzes
which channels are still with it and which ones should
simply retire.
TV and radio are broadcast classics. Sixty-five percent
of local affiliates—which include agents, dealers, and
franchisees—use radio, according to the report. In fact, this
channel comprised 12% of their total spending in 2013. Of
those leveraging radio, 68% claim to be somewhat or very
satisfied with the results they’ve seen. As for those who
don’t use it, 85% cite cost as the main reason. In regards
to television, 50% of respondents leverage it, and 65%
of these users are somewhat or very satisfied with the
results. Television accounted for 6% of local affiliates’ total
spend in 2013. But like radio, cost is a main deterrent for
not tuning into TV. In fact, 93% list cost as the key factor
for not leveraging TV. Other oldie-but-goodie channels in
use today include coupons (83%), newspapers (63%), and
Yellow Pages ads (61%). Of those traditional channels,
newspaper accounted for the highest spend in 2013—with
local affiliates allocating 15% of their total budgets to it.
In terms of more personalized channels, direct mail
and email continue to leave a legacy. Eighty-one percent
of local affiliates send direct mail, which comprised 7% of
total spend in 2013. What’s more, respondents seem to be
happy with this conventional communication. According
to the report, 75% are somewhat or very pleased with the
channel’s results. And although email is constantly evolving,
its performance remains reliable. Seventy-two percent of
respondents use email. The channel accounted for 1% of
total spend in 2013, and 76% of the respondents who use
email are somewhat or very satisfied with the results. Still,
these channels that have withstood the test of time face
their fair share of challenges. Of the approximate one-fifth
of respondents who don’t use direct mail, 70% cite cost
as the primary reason. And as for the 28% who don’t use
email, 56% say that it’s too complicated.
But what about those newfangled digital and social
channels? Nearly three-fourths of local affiliates (72%) have
a website, according to the report. Of those who do, 73%
are somewhat or very satisfied. As for the 28% who don’t,
55% say it’s because websites are too complicated. Paid
search also garners a lot of attention; 60% of respondents
use it and it accounted for 10% of total spend in 2013.
Seventy-three percent of paid search users are somewhat
or very satisfied with the results. But for those who don’t
use it, 46% say it’s because it’s too complicated. In addition
to websites and paid search, local affiliates are also using
social media. However, they have their preferences. For
instance, 63% of respondents use Facebook, but only 43%
use Twitter. And although 71% and 61% of respondents
are somewhat or highly satisfied with the results that they
gleaned from Facebook and Twitter, respectively, not a
penny of the 2013 spend was dedicated to either platform.
When creating a marketing strategy that will last through
the ages, it’s important to have a mix of traditional and
new-age channels.
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MEDIA
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6 Reasons to Invest in Direct Mail
by Michele Meyer
Direct mail still works. Here’s why. Not new and snazzy
like its digital brethren, direct mail gets little respect. But
while some marketers deride the old-school tool, others
find it vital to their Omni channel approach. Indeed, 38%
of marketers used three channels and 29% used four to
integrate their 2014 campaigns, Experian Marketing
Services reports.
Don’t knock direct mail: Its response rate among
existing customers is 3.4%—more than 28 times the 0.12%
for email, according to the Direct Marketing Association
(DMA). Catalogs alone—a sliver of the total volume of
direct mail—bring in $2 for every prospective customer
they reach and $10 for every returning customer, the
American Catalog Mailers Association reports.
“Direct mail refuses to go away because it works,” says
Bruce Biegel, senior managing director at Winterberry
Group, a management consultancy specializing in
advertising and marketing.
Here are six reasons why marketers should continue to
invest in direct mail and weave it into their Omni channel
marketing efforts:
1: Consumers still relish mail
Rarely do we linger on billboard, banner, radio, or
TV ads—except, perhaps, during the Super Bowl—yet
many of us open our mail with hopeful anticipation.
“You don’t become ‘blind’ to direct mail as you do with
banner marketing,” Biegel says.
Indeed, 70% to 80% of consumers polled say they
open most of their mail, including what they label
“junk,” according to data in the DMA’s 2014 statistical
fact book. And 38.4% to 62.8% of household heads—a
median of 45.4%—report “immediately” reading direct
mail, according to the U.S. Postal Service.
2: Recipients respond
People not only skim, but also heed direct mail’s callto-action—and not just when a prepaid envelope or QR
code is included. In fact, according to a report in The
Wall Street Journal, JCPenney is bringing back its print
catalog because data showed that much of the retailer’s
online sales were driven by the catalog.
“You’re not as likely to respond [to a call-to-action]
while viewing TV or other passive advertising,” says
Wes Sparling, VP marketing strategy at IWCO Direct, a
provider of direct marketing services. Direct mail replies
average more than 13%, the DMA reports.
3: Calls-to-action can be digital
Marketers can boost direct mail response rates by
including an SMS or QR code call-to-action; for example,
to request or view more information, to receive coupons
or discounts, or to opt in to a contest or sweepstakes.
“Mobile integration makes direct mail come to life—and
you can reduce your mailer’s size,” says Laura Marriott,
CEO of NeoMedia, a mobile marketing firm.
When a local landscaper’s pitch piqued Marriott’s
interest, she used the enclosed QR code to explore more
details and visuals than a mail piece could contain, she
says. “I hired them, and now I have a beautiful garden.”
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without it, the CMO Council reports.
Latcham Direct, a customercommunications
solutions
firm,
emblazoned the front of its 2014
holiday cards with client names and
their interior with a personalized
URL—which generated enough opens
and clicks to yield a 53% response to
a set of unique landing pages that
enabled recipients to choose small
gifts and designate charities to which
the firm would donate. “The direct
mailing was an engaging experience,”
says Judy Berlin, marketing VP at
XMPie, the marketing software
provider Latcham used to run the
campaign.
5: Flexibility is inherent
4: Personalized pitches in print
can carry through to digital
Using prospects’ names spikes
their interest. Adding other relevant
details to a direct mailer based on
customers’ gender, age, preferences,
past purchases, and the like ensures
engagement. “The more personal,
the more likely mailings will be read
through,” IWCO Direct’s Sparling
says.
In fact, consumers today expect
tailor-made content: 54% say they’d
consider ending a brand relationship
Direct mail delivers in so many ways,
from postcards and letters to brochures
and catalogs. And that’s just form
factors. The ability to customize
content and add multiple elements of
personalization within direct mailers is
nearly infinite.
“Each element serves as a
salesperson,” Sparling says. “An envelope
can tease someone into opening the
piece, and then you can present your
biggest benefit in the Johnson box to the
upper right.” Other copy and inserts can
reinforce your missive with facts, features,
and testimonials.
But don’t stick to a formula.
Instead, vary content and images
based on customer data or intersperse
mailing types, says Keith Goodman,
VP of corporate solutions at Modern
Postcard, a direct mail marketing firm.
“You don’t want to make mailings so
different they lose their relationship to
each other,” he says. “Your first piece
may have resonated, the customer just
didn’t need your product or service at
that time.”
6: Being highly targeted gets
highly measurable results
Direct mail allows marketers to
segment recipients by behaviors,
demographics, geography (which
further indicates income and interests),
and more, so they know precisely
whom they’re reaching, Sparling says.
“Unlike other marketing, direct mail
is measurable and controllable. You
can make assumptions on how the
targeted audience will use products
and test various offers,” he says.
“Then you take the winning copy,
send it out to a broader market, and
have a good idea of your return.
That’s why direct mail is the backbone
of lead generation.”
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CATEGORY
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Amazon Puts Down Roots at Purdue
University: What does it mean for retail?
by Bryant Harland
Amazon recently celebrated the grand opening of
its first staffed pick-up and drop-off location at Purdue
University, a move that connects the brand with its more
humble beginnings. Education was embedded into the
brand’s early DNA when the first product it ever sold
was a science textbook, and, while it has become known
as an online shopping destination where consumers can
buy just about anything, it remains a popular source of
back-to-school (BTS) items.
According to Mintel’s Back-to-School Shopping
U.S. 2015 report, 36% of all back-to-school shoppers
visited Amazon during 2014. Although not as high as
the share of shoppers who visited Walmart (78%), it is
statistically equal to the share who visited any office
supply store. The brand becomes even more popular
when considering shoppers who are buying for college
students. Nearly half of shoppers who bought BTS items
for college or university students (other than themselves)
visited Amazon and 50% of college students buying for
themselves also visited the site.
What does Amazon’s on-campus partnership
mean for retail?
The often-cited weakness of online-only retail, or
e-tail, is that the lack of physical storefronts makes it
impossible for these businesses to recreate some of the
positive experiences that brick-and-mortar stores can
offer. Naturally, some industry commentators, including
TechCrunch’s Darrel Etherington, have already cautioned
that Amazon’s latest announcement should be cause
for concern for other retailers. As Etherington noted,
the brand is already planning to expand its presence on
Purdue’s campus. If successful, it’s likely that it will want
to further grow its physical presence. So, should other
retailers be worried?
36% of all back-to-school shoppers visited
Amazon during 2014
While Amazon is not immune to making mistakes, the
company consistently does several things exceptionally
well. The brand benefits from long-held industry
recognition for being a leader in highly effective supply
chain management, which has allowed it to operate
efficiently and achieve high order fulfillment as well
as pioneer value-centric features like free two-day
shipping. Further, this is not Amazon entering into a
new market – instead, it is capitalizing on an already
engaged following by delivering even more value to its
college-aged customers.
From a consumer perspective, the company’s
strong track record of excellent service translates to
a deep level of trust. Mintel data shows this trust is
why Amazon attracts a large share of shoppers even
in product categories that usually depend on the look
and feel of an item. According to Mintel’s Shopping for
Home Decor U.S. 2014 report , for example, shoppers
overwhelmingly preferred to buy decor items in-store
overall, yet 40% still reported buying decor items
from Amazon.
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Furthermore, this isn’t the first
time an online-only retailer started
opening physical locations. Online
apparel retailer Bonobos opened
six similar locations in 2012,
where customers can schedule
appointments to try out clothing in
different sizes, but placed orders
through the Bonobos website.
According to Bonobos CEO Andy
Dunn, each store was on track to
earn $250,000 in sales within the
first six months of opening.
opportunity to showcase a greater
Will Amazon stop at
universities?
on price and product selection
range of products and expand
its brick-and-mortar infrastructure
beyond the back-to-school market.
Ultimately, this move signals the
increasingly interconnected nature
of ecommerce and brick-and-mortar
retail.
While
online-only
stores
have started investing in physical
infrastructure, traditional retailers
have also been heavily investing in
their digital channels.
It is tempting to focus largely
when looking to the success of
It makes a lot of sense for
businesses like Amazon. While these
Amazon’s venture into staffed brick-
are dominant factors, particularly
and-mortar locations to start with
for online shopping, the value of
colleges. As previously mentioned,
retailers’ services cannot be ignored,
the brand has considerable traction
particularly given the wealth of
among back-to-college shoppers,
multichannel research that many
and the Purdue location will likely
consumers conduct before making
give it a greater presence in that
a purchase. For instance, according
regard, especially when combined
to Mintel’s Online Shopping U.S.
with planned services such as free
2014 report, more than one-fifth of
one-day shipping for textbooks and
consumers performed every type
other products for Purdue students.
of research studied, which included
However,
that
comparing prices on a mobile device
when Amazon succeeds, it expands
while at a physical store, browsing
the scale of that success, and it is
for pictures of items for inspiration
likely that this initiative will serve as a
for what to buy and reading product
testing ground to see whether larger
and service reviews.
investment
history
brick-and-mortar
As initiatives such as Amazon’s
infrastructure would be worth the
evolve, it will not be enough to just
operational cost. According to a
offer lower prices. Increasingly, the
February 2015 article in Bloomberg,
competitive battleground of retail
Amazon has expressed interest in
will be in the ability to effectively
acquiring some of RadioShack’s
meet
physical
online and at every other point of
electronics
in
shows
stores
following
retailer’s
the
bankruptcy
filing, which would give Amazon the
customers’
needs
interaction with the brand.
offline,
QUICK
FACTS
70% of
millennials
shop for
foods at
specialty
retailers that
sell a wide
variety of
health foods.
68% of
U.S. online
shoppers
will not
make
purchases
with retailers
that do not
offer free
returns
shipping.
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Are Grocery and C-stores a Threat
or Opportunity for Fast Casual Restaurants?
by Brenda Rick Smith
You’re feeling a little hungry, and you are in a bit of
a hurry. You want something that’s fast, fresh, organic
and healthy, but you don’t want to pay more than $10
for your meal.
Where do you go? Increasingly, the answer may be
your local grocery retailer or convenience store.
Grocery stores and convenience stores have
long offered grab and go foodservice options for
consumers, but now foodservice options are becoming
more varied and sophisticated. While new offerings
may put some grocery stores and c-stores in direct
competition with fast casual brands, new partnerships
also present new opportunities for fast casual brands
to reach new audiences and new markets.
Foodservice growing in grocery
One of the fastest growth areas in foodservice is
prepared foods at grocery retailers, according to Jason
Whitmer, president of Market Research at Cleveland
Research Company. Whitmer presented his research on
Foodservice in Grocery at the International Foodservice
Manufacturers Association President’s Circle event in
Phoenix, Ariz., last November.
Prepared foods are an increasing part of the mix in
the “perimeter” departments – meat, seafood, produce,
deli, etc. – of grocery stores. Traditional grocery stores
have been growing the perimeter department sales mix
to around 40% of total sales, while the figure is even
higher for specialty grocers like Whole Foods.
While prepared foods still likely represent only a
single-digit slice of perimeter department sales, that
single-digit percentage could be significant considering
many grocery retailers do $20 million in volume compared
with the perhaps $3 million a high-performing restaurant
might do.
Prepared food sales are also expected to grow,
perhaps increasing to year-over-year growth in the midteens by the end of this year.
Whitmer estimates that as much as 20 points of
Whole Food’s 70% in perimeter sales is prepared foods.
Prepared foods are stretching far beyond a deli counter for
many grocery stores. Offerings now often include extensive
soup and salad bars, sushi bars, olive bars and more.
And some grocery retailers are even going so far
as to offer their own restaurant experience right in the
store.
Lunds & Byerlys, a small upscale grocery chain in
Minneapolis-St. Paul, Minn., offers its own Lunds &
Byerlys Kitchen in its Wayzata location. Lunds & Byerlys
Kitchen features food offerings prepared on site and in
view of guests by an executive chef, a wine and beer bar
and a tailored selection of groceries.
Menu selections include burgers, stone-oven pizzas,
seasonal entrées and weekly meat and seafood flights.
The wine and beer bar features “hyper-local” craft
beers. Customers order and pay via iPads located at
each table.
Grocery stores also bring restaurant brands under
their own roofs, presenting customers with restaurant
kiosks or units right inside the store.
Texas-based H-E-B is a standout, “incubating” new
ideas, said Whitmer. Fast casual coffee and smoothie
chain Maui Wowi has several units in H-E-B stores, for
instance.
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C-store success
Convenience stores may soon be getting in on the
act, too, bringing fast casual brands under their roofs.
Quick service and pizza concepts are not an unfamiliar
sight at gas station convenience stores and truck stops,
but fast casual chains are still a bit unexpected.
Elliott Oil Company is pioneering the trend in Iowa.
The company, which has 17 locations, opened a Pita Pit
in its BP gas station/convenience store located at 1147
N. Jefferson Street in Ottumwa, Iowa, last year.
Elliott Oil is not new to foodservice. It got into
the foodservice business in the 90s, and now offers
Godfather’s Express in nine of its locations, among other
offerings. Pita Pit however is a new concept for Elliott Oil.
Not only is the Pita Pit a first for Elliott Oil, says VP
Andrew Woodard, it’s a first for Ottumwa.
The small city, which has a population of around
25,000 according to Woodard, has many quick-service
and pizza restaurants, but no fast casual concepts. The
Pita Pit in the Elliott Oil convenience store is the first in
the region.
When the city of Ottumwa decided to do major works
on the intersection where one of Elliott Oil’s convenience
stores was located, Woodard says the company took the
opportunity to rebuild the store and rethink offerings.
The result is a 4,000+ square foot store, with 1,000
square feet dedicated to Pita Pit. The store also includes
seating, Wi-Fi and a frozen yogurt bar.
So far the concept has been well-received. Since it
opened in the fall, the Pita Pit accounts for 38% of the
inside sales for that Elliott Oil location. In comparison,
foodservice accounts for somewhere around 28% of
store revenue system-wide.
Woodard credits the early success to Pita Pit’s appeal,
particularly to Millennials. Millennials, with their $600
billion in spending power, are a key consumer audience,
and they are increasingly relying on convenience stores
for meals and snacks. According to a study by the NPD
Group, convenience stores accounted for 11.1% of
millennial food and beverage stops in 2014, up from
7.7% in 2006.
“My generation still really focuses on the basics:
convenient location, clean location, competitively
priced,” says Woodard, who is 27. “They also want to
create their own meal. That’s what Pita Pit offers. It’s
made right in front of you.”
Woodard got the idea for putting a Pita Pit in the
Ottumwa location from Elliott Oil’s foodservice manager.
She heard about the brand from family members
attending college in another city an hour away. Woodard
remembered the brand from his own college experience,
and agreed it might be a fit.
He’s now considering revamping some of Elliott Oil’s
other Ottumwa c-stores to include fast casual outlets.
Ca
CATEGORY
TRENDS
U.S. Home Prices Rise, Service Sector Expands
Despite Consumer Sentiment Dips
by Ryan Vlastelica & Michael Connor
U.S. home prices rose again in December and activity
in the services sector expanded in February at its fastest
pace since October, but a gauge of consumer confidence
fell, according to recent reports published.
Federal Reserve chairman Janet Yellen also noted that
the slowly improving U.S. economy may lead to a rise in interest
rates later this year in testimony she gave to Congress.
U.S. single-family home prices rose in December, led by
strong increases in the western half of the United States, a
closely watched survey said.
The S&P/Case Shiller composite index of 20 metropolitan
areas gained 4.5% in December from the prior year. This
was above a Reuters’ poll of economists that forecast a rise
of 4.3%, as well as the 4.3% growth rate in November.
“While prices and sales of existing homes are close to
normal, construction and new home sales remain weak,”
David Blitzer, chairman of the index committee at S&P Dow
Jones Indices, said in a statement.
“The softness in housing is despite favorable conditions
elsewhere in the economy: strong job growth, a declining
unemployment rate, continued low interest rates and
positive consumer confidence.”
However, Toll Brothers Inc. (TOL.N), the largest U.S.
luxury homebuilder, reported a higher-than-expected
quarterly profit and raised the low end of its full-year home
delivery forecast.
The company now expects to deliver 5,200 to 6,000
homes in 2015 at an average price of $725,000-$760,000.
It had earlier forecasted deliveries of 5,000 to 6,000 homes
at $710,000-$760,000.
“More jobs and better jobs should boost household
formations and provide a basis for stronger housing
demand,” executive chairman Robert Toll said.
U.S. construction on new homes rose 18.7% to a 1.07
million-unit annual pace in January, compared with a year
earlier; the Commerce Department’s data had shown.
Home Depot Inc. (HD.N), the world’s No. 1 home
improvement chain, also posted a better-than-expected
rise in quarterly same-store sales, but the company
warned a strong U.S. dollar will likely hurt 2015 earnings.
U.S. homebuilders remain upbeat about market
conditions, according to a survey by the National
Association of Home Builders published in late February.
However, U.S. consumer confidence fell more than
expected in February, pulling back from a multi-year high
according to a private sector report that was recently released.
The Conference Board, an industry group, said its
index of consumer attitudes fell to 96.4, the lowest since
September, from an upwardly revised 103.8 in January.
A recent increase in gasoline costs from a six-year low
may be curbing the enthusiasm of some households
after a plunge in prices last year and a pickup in hiring
helped confidence surge. A gallon of regular gasoline
cost an average $2.31 on Feb. 23 according to the U.S.
Energy Information Agency. While that is still below last
year’s peak of $3.70, it is up from an almost six-year low
of $2.03 in January.
In other data, the U.S. services sector expanded
in February at its fastest pace since October, with
businesses reporting more orders because of improving
economic conditions.
Financial data firm Markit said its preliminary, or
“flash,” reading of its Purchasing Managers Index for
the service sector rose to 57.0 in February from 54.2 in
January.
The report far outpaced forecasts in a Reuters’ survey
for a February reading of 54.0. A reading over 50 signals
expansion in economic activity.
“While parts of the East Coast have struggled in
the face of adverse weather, other regions basked in
unusually warm temperatures, boosting business above
seasonal norms,” said Chris Williamson, chief economist
at Markit, in a statement. “Activity levels surged higher
and inflows of new business boomed as a result.”
Markit has said its flash U.S. Manufacturing Purchasing
Managers Index rose to 54.3 in February from January’s 53.9.
“Alongside the upturn signaled by the sister ‘flash’
manufacturing PMI survey, the improved performance of
the service sector in February means the economy looks
to be enjoying yet another spell of robust growth in the
first quarter,” Williamson said.
U.S. stocks advanced modestly in late February, with
the Dow and S&P 500 at intraday records, as investors
attempted to interpret testimony by Federal Reserve
chair Janet Yellen on the state of the economy and
possible future interest rate rises.
MSPARK
TRENDS
FUN
FACTS
39%
of men and
32% of
women hire
professional
landscapers
for their
lawn care
needs
(Admall)
CASE
STUDY
CLIENT NEED :
Current grocery/retail print
customer looking to increase
traffic, sales and to secure
market share in their local area.
SOLUTION :
While continuing to mail monthly
postcards, the client signed a 6
month digital contract for the Social
Coupon + Amplification Package
RESULTS: in 5 months, the campaign generated
• 729 New Facebook ‘likes’
• 70,752 Facebook ad impressions with a 2.1% action rate (industry average: .033 – .22%)
• 60,251 Directory Total impressions with a 15% action rate
• 167 new customers submitted to their database
• 252 shoppers use the $10 off the next $30 offer. Their Average Basket Size was $53.77. This offer generated over $13,000 in sales!
CLIENT TESTIMONIAL
“Without those sales we would’ve had a drop in
10.7% of
rural
consumers
plan on
spending
more on
home
improvement
in the next
90 days… up
from 9.4% in
December of
2014!
customer count of 0.54% and sales shrink of 4%
from last year. Instead we had 1.22% sales growth
over the same week last year at 2.02% Customer
Count Growth!!”
Case study supplied by Peter Lucas of Dara Macan’s Team.
Did You Know That:
March 16, 1934
Congress authorizes the Dept.
of Agriculture to license hunters.
The licenses, commonly called
“Duck Stamps,” are sold through
post offices across the country.
The revenues continue to help
maintain waterfowl life.
(Big Insight Feb 2015)
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