Bid Farewell To Coupon Clipping?

This column was written by Evan Schuman, the editor of StorefrontBacktalk, a site that tracks retail technology, e-commerce and security issues. Retail Realities appears every Friday. Evan can be reached at e-mail and on Twitter.

The chain is officially known as The Great Atlantic & Pacific Tea Company and operates in the U.S. in 435 stores in 8 states and the District of Columbia as A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics. The grocery legend trades on the New York Stock Exchange as GAP, given that it was founded in 1859 - 110 years before the clothing chain bearing that name opened its first store.

But these days, the grocery chain is trying to plot its tech future and has recently moved to one version of online coupons. Its initial foray into paperless discounts is simple: Consumers hit a store Web site, identify themselves with their loyalty card numbers and select various discounts, all financed by various consumer goods manufacturers.

The choices are saved and then can be accessed again when customers use their CRM cards to identify themselves at checkout. If consumers don't have their cards, they can instead identify themselves by keying in their phone numbers. A&P is far from being the first national retailer to try and push where loyalty programs can go. Last month, CVS launched a new loyalty program-for shopping bags.

For A&P, though, one of the key benefits is a sort of two-way CRM gain, said Don Yee, A&P's VP of CRM, online sales and customer care. The vendor the retailer is working with, Zavers, benefits because it learns about the consumer via a slice of the chain's CRM database that A&P is sharing with them, ostensibly to help Zavers deliver more targeted coupons, which is a plus to both the vendor and its manufacture clients.

In return, though, Zavers delivers back to A&P extensive information about the coupon-selection choices that A&P's customers make. There's a catch: A&P may know what each customer ends up buying, but Zavers will know first-and, until it shares, know exclusively-what options that consumer was shown before the final choice was made.

Although all is far in love and war, the rules are different in marketing. Yee stressed that the A&P contract with Zavers prohibits the free-agent vendor from using any of the chain's data "to enhance a competitor. They're not allowed to use our customer data" for a rival.

Zavers starts off the process looking for customers in key ZIP codes that its consumer goods clients want to target.
Like every other retail chain, A&P is seriously examining Mobile Commerce options, Yee said, but the grocery has made more decisions about what it doesn't want than what it does. "We do not want a means for having the barcode on the cell phone" because Yee has found such efforts to be "not too accurate."

Yee is not alone among retailers having concerns about direct phone barcode scans; others are complaining about glare or even excessive dirt impacting read rates. But the A&P exec said his concerns are more generic, as in "the imaging of the mobile device itself and the readability of the barcode on the mobile."

Another factor is that chains need to deal with a staggeringly large number of different phones, with very different screens, and they must interface with all of them with the same barcode scanning wand.
That's pushing Yee to focus on true back-end server services, where the phone-just like the digital coupons that the chains are just now starting to accept-acts solely as an authenticator, an identification device. The real data communications happen on the backend, server to server. In a sense, it's treating both the phone and the POS station as dumb terminals, with the real magic happening elsewhere in a more controlled environment.

This approach would also advance Yee's goal of simplifying matters for consumers, who sometimes-with other chains, Yee said-have had to register multiple times to get access to all possible coupons. It required "customers to register each and every time in order to receive the offerings," he said. Instead, A&P wants a server (possibly cloud) system "feeding into one pipeline directly into our POS system. Customers could then receive an alert on their mobile device, telling them of new offerings. They could open the app, see the offer and select the offer. We want one gateway and for the digital coupon to be agnostic."

The recent U.S. consumer infatuation with mobile devices-especially smartphones-has jump-started the imagination of every retail marketing exec, with some going so far as to try to differentiate what certain kinds of mobile phones say about the consumers who use them.

By Evan Schuman
Special to CBSNews.com