Target, Dollar Stores Take a Traditional Route To Entice the Modern Consumer

Last Updated Nov 30, 2010 7:01 PM EST

Target (TGT) led retailers in the free standing insert pages distributed in 2009, almost doubling its commitment to a traditional form of retail marketing, but one that remains effective.

Indeed, while Target made a big investment in FSIs last year, some retailers were even more enthusiastic, at least proportionately speaking.

Free standing inserts, the kind of flyers that come in newspapers, promoting sales and new products, and frequently including coupons, have been around for ages. During the recession, many retailers relied on them more heavily.

In an age of email blasts and social network initiatives, traditional marketing vehicles such as FSIs, direct mail pieces and Sunday circulars might seem quaint but testimony to their effectiveness can be found in retailer devotion. Bed, Bath & Beyond (BBBY), for example, continues to broadly distribute the $5 off coupons that used to duel with those from rival Linens 'N Things in mailbags across the United States. Although its major rival and direct mail competitor is no more, Bed, Bath & Beyond keeps the coupons moving to its customers, who have come to expect them. Some years ago, under Chuck Conway, Kmart tried to cut back on circular advertising and shift marketing dollars to other forms of promotion. The results were disastrous and helped push the retailer into bankruptcy.

Target said it was determined to get its price message out in 2009 after experiencing recession-related sales declines and its seems as if FSIs were a vehicle. With a 44 percent lift, Target almost doubled the number of free standing insert pages it distributed last year versus 2008 to 1.8 billion, according to Marx Promotion Intelligence, a division of TNS Media Intelligence.

Dollar-store chains had a different reason to get the word out. They saw an opportunity to draw consumers who were looking for low-cost shopping alternatives in the recession. Dollar stores wanted to let consumers, particularly consumers who hadn't shopped them before, know more about the bargains they offered. Yet, winning over new customers isn't all that's on the mind of dollar store executives. Despite the nascent recovery, dollar stores continue to post pretty good results suggesting consumers who shifted purchasing in their direction are inclined to continue shopping, at least in this phase of the recovery. FSIs remind new and existing customers about the discounts dollar stores offer and even provide the occasional coupon incentive. So they can act as a vehicle for customer retention as well as acquisition.

Dollar General (DG) increased its free standing insert pages by a whopping 386 percent, said Marx, to more than 885 million, making it the third ranking FSI marketer in 2009 just behind PETsMart (PETM). In terms of ranking moves, Family Dollar (FDO) made the biggest gain in the top 10, moving from 17 to six by increasing promotion pages by 227 percent.

Other members of the top 10 were Walgreens (WAL), fourth, CVS (CVS), fifth, Kroger (KR) namesake store divisions, seventh, Publix, eighth, Safeway (SWY), ninth, and Rite Aid (RAD), 10th.

Overall, retailer FSI pages increased 38 percent to more than nine billion pages in 2009, Marx stated, setting a record. Also, FSI coupon activity increased eight percent during 2009 to more than 272 billion coupons dropped, the highest yearly total in a decade.

By the way, those figures indicate that Target generated 20 percent of all FSIs distributed last year. Target may foster an up-to-date image, but it's inordinately found of an old-fashioned way of doing it.