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Eliminating advertising circulars is not necessarily a good idea

During the National Grocers Association conference at the San Diego Convention Center, the experience of a Milwaukee-area chain which discontinued circular advertising but returned to the circular nearly a decade later was discussed.

Ted Balistreri, who is the co-owner of the Sendik’s Food Markets chain his grandfather founded as a single store in 1926, gave a presentation called “Is the Circular Dead?” in which he noted that replacing circular mailings or newspaper inserts with digital alternatives reduced cost but also reduced sales in the long term.

“All of us in this room are looking for the most efficient and cost-effective way to drive customer demand,” Balistreri, who is also on the NGA executive committee as the board secretary, said. “We are all of us in this room searching for the best, most efficient manner to reach our customers.”

Sendik’s is a family-owned chain and now has 17 stores in the Milwaukee metropolitan area which has a population of approximately 1.5 million. Before the conversion from print circulars to digital marketing, Sendik’s sent circulars to approximately 800,000 households at a cost of approximately $2,000,000.

”The ad was beautiful, but it was expensive,” Balistreri said.

The circulars were discontinued in 2009, when Sendik’s had eight stores and approximately 90,000 customers on a monthly basis. The conversion activities included an electronic “club” program with prizes as well as specials.

“This seemed very popular, and the distribution of the ad in this manner cost next to nothing,” Balistreri said.

The transition also included a four-week period in which the circulars noted that residents would no longer receive the circulars. That notification informed customers that print advertisements would still be available in the stores while encouraging customers to utilize email to receive notices of Sendik’s specials.

The use of electronic advertising not only reduced the cost by approximately 75 percent but also reduced the necessary lead time to prepare the advertisements from seven to two days.

“We could detect no difference in sales after we dropped the circular,” Balistreri said. “It was a non-event for our company. When we stopped, nothing happened.”

Sendik’s did not rely completely on electronic and in-store advertising. The money saved from eliminating the circulars was used for run of press, within a newspaper section rather than as an insert, advertising, although that was in the Milwaukee Journal Sentinel rather than in any suburban newspapers and the effectiveness declined when the circulation of the Journal Sentinel decreased from 500,000 in 2008 to 150,000 in 2018.

“It’s not a very effective tool,” Balistreri said of the run of press advertising in a daily newspaper.

Other advertising forums such as radio and outdoor billboards were also analyzed.

“For 10 years we stayed out of mailing circulars. During that time, we experienced very good growth,” Balistreri said.

Sendik’s added nine stores during those 10 years. Competitors, including discount department stores which had added groceries, added approximately 2 million square feet of retail space.

“A lot has changed in 10 years,” Balistreri said. “The competition landscape was changing dramatically. Our sales were starting to stagnate, and we needed a jump-start.”

A 2018 Wall Street Journal article concluded that potential customers were more likely to read print advertisements than email advertisements.

“People still read their mail,” Balistreri said.

Saving money is a goal but is not Sendik’s primary goal.

“I’m trying to get people in my store,” Balistreri said.

Sendik’s once again mails circulars to Milwaukee area residents.

“If you would have asked me eight years ago, I’d have said I’d never go back to print,” Balistreri said. “Times have changed. We are now back with a circular and very happy with the results.”

Joe Naiman can be reached by email at [email protected].

Author Bio

Joe Naiman, Writer

Joe Naiman has been writing for the Village News since 2001

 

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