The Evolving Circular

Digital circulars are trendier than ever – with the September 2013 launch of CVS/pharmacy’s myWeekly Ad as a prominent example. But there’s still little clarity when trying to understand how quickly or fully the focus of retail circulars will shift from print to digital. According to the Path to Purchase Institute’s Trends 2014 survey of brand marketers, the tipping point in terms of online circulars replacing most print circulars is still in the distance (see chart and related article at right). The majority of marketers, 54.3%, believe the tipping point won’t occur for five years, while another 19.5% believe it’ll take a decade.“What we’ve seen change most rapidly over the past year is the speed of innovation and trial when it comes to digital,” says Curtis Tingle, senior vice president, strategic demand and development, Valassis, Livonia, Mich. “We are definitely still in a state of testing.”CVS is betting that getting personal will deliver results (see related article). The New York Times recently deemed the drug chain’s digital circular innovation a “big step forward” in the crowded landscape of customized circular options.MyWeekly Ad is essentially a tailored version of the weekly print circulars CVS has distributed for decades via newspapers and in-store (currently, to an estimated 45 million people). The digital circular calls out “Deals on things you buy, ” incorporates printable shopping lists that are shareable through email or mobile, and tells consumers which aisles in their local store stock the products they plan to purchase. “Technology has finally caught up with our imagination,” says CVS spokesperson Erin Pensa, who adds that myWeekly Ad is based on the insights of the company’s ExtraCare program. (More than 84% of its front-end sales are completed using the loyalty card).Members who register online can see the personalized deals at their preferred location via CVS’ primary and mobile websites, the latter of which is accessible through the CVS mobile app. “Shoppers no longer have to browse each page of a paper circular to find the deals that interest them,” says Pensa. “Instead, each user will immediately see which of their favorite items are on sale that week, including frequently bought items or hot deals in categories that might be of interest.”The Right CombinationFor now, there are enough passionate fans of print circulars to keep them a necessary core investment for retailers. At the Shopper Marketing Expo in October, Kim Feil, EVP, chief marketing and strategy officer, OfficeMax, said she hopes vendors will help retailers develop strategies to move away from paper. “If you guys can help us figure that one out, it’s the Holy Grail,” she said. “We spend millions and millions of dollars every week, and it goes in the trash can. There’s only a small portion still reading them, but they’re big enough that you still have to do it.”It’s not just older generations (e.g., Baby Boomers) who are hanging on to their circulars. According to Valassis’ 2013 RedPlum Purse String Survey, 51% of Millennials get their deals from newspapers, while 33% receive deals in the mail. And 21% say they use retail circulars.As a result, Tingle says, marketers are striving for an “omnichannel” media strategy rather than choosing between digital and print. “It’s not so much as either/or,” he says. “When you look at the strength of the print circular and the rising impact of digital media, marketers are faced with deciding what the right combination is to activate a shopper.”While promotion-sensitive younger consumers do respond to print promotions, there’s no doubt that Millennials are leading the digital trend. And their younger counterparts, Generation Z, are expected to continue the move away from print.Exploring AlternativesTo reach these consumers, a stream of vendors is attempting to offer scalable digital alternatives to traditional circulars. Among them is Retale, a mobile app and website that launched in the U.S. after a successful debut in Europe. The app’s parent company, Bonial Enterprises North America, Chicago, is working with top retailers including Target, Kohl’s, Toys “R” Us, Family Dollar and Radio Shack to replicate the print circular experience in a digital format while providing new functionality that can’t be incorporated into print. Shoppers can page through the digital version as they normally would, but they also can search by product or brand to locate local store sale items, create shopping lists, create alerts for items, share deals with friends on social media, and even view videos or other product information.“The pain for retailers in terms of the decline of newspapers and being so promotionally oriented is generally bigger in the U.S. than in Europe,” says Pat Dermody, president, Bonial Enterprises North America. “My observation is that retailers here are really leaning into innovation. Everyone knows that print circulars still work – I’m not here to tell you the print circular is dead – but the facts are undeniable. The distribution methods are changing because the consumer is changing.”Other companies have innovated by purposefully moving away from simply replicating the print circular experience online. They are changing the user interface altogether. Wishabi Inc., Toronto, and its Flipp app for the iPhone, for example, allows users to simply tap a finger to save to shopping lists and group by store.And another digital circular-focused company, Los Gatos, Calif.-based Wanderful Media, recently expanded its Web-based app, Find&Save, to the iPad and iPhone. It offers drag-and-drop lists, “favorites” creation and new sale alerts. “We always intended to make a big bet on tablets and phones,” says Ben T. Smith IV, CEO, Wanderful Media. “There has been a lot of recognition that Web-based options that simply flipped pages like a print circular had nothing to do with what the consumer is actually doing – trying to discover sales opportunities. It’s been very rare that anything that has been successful on the Web looks like it did on paper.”Smith says that tablets and smartphones lend themselves to the casual lean-back discovery that has traditionally been part of leafing through a circular, as opposed to the specific searching usually done on a desktop for personal errands. “It really was the tablet that has enabled people to have this more natural experience – just as video consumption blew up once tablets were commonplace.”Challenges still exist in terms of gathering retailer data, efficiently turning traditional circular content into local discovery, and getting enough scale, Smith says. Therefore, retailers like CVS going out on their own with digital circulars and a new level of targeting and customization may mean they’ll “leapfrog over the competition.”“No other national retailer has ever provided this level of personalization before,” says CVS’ Pensa. “Personalization with circulars and in the greater retail space is not going away.” TOPIC: PRINT VS. DIGITAL CIRCULARS"Just switching your circular from print to digital is short-sighted because we relate differently to digital."— Alison Chaltas, GfK"Circulars will have to follow the audience to media that they use. An interesting trend we're seeing is that Millennials are also picking up circulars in-store."— Craig Elston, The Integer Group"For the foreseeable future, print remains important to U.S. shoppers. At the same time, more shoppers are utilizing digital circulars because the personalization drills down to an individual's specific needs. Right now, you can't abandon one approach at the expense of the other. You have to be good at both."— Manish Shrivastava, Coca-Cola Co."The expansion of tablet penetration will be the tipping point for the conversion of printed circulars to dynamic, personalized, preferred communication channels for weekly promotions. Billions of dollars in printed material and waste management will be saved and redirected into more personalized and satisfying shopper experiences, innovation, brand/product marketing and more favorable pricing when we can permanently skip the paper-based model."— Kim Feil, OfficeMax"It's not one or the other. Certain vehicles work for certain shoppers and occasions."— Wendy Liebmann, WSL Strategic Retail"Those retailers who are focused on testing, learning and jumping ahead of the pack to extend the circular's power and relevance will be the winners of tomorrow, especially as it relates to Millennial shoppers. Keep an eye on Walmart. They have a vision and are acting on it in 2014, way ahead of many other big retail chains."— Chad Grenier, AMG/Mosaic

The Evolving Circular

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