American Stores
Marketing and Merchandising
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Customer Loyalty Cards
The Company is one of the industry leaders in customer loyalty cards. ASC has issued over 20 million cards and offers them in all its major food and drug markets. The cards entitle the holders to added savings, automatic coupon discounts, free items, prizes and sweepstakes participation.
The customer shopping information obtained through the cards allows the Company to tailor advertising efforts based on customers' preferences. The Company analyzes the shopping patterns and purchasing statistics so it can market to specific customer needs. Its new Revelar decision support system allows efficient use of the data in formulating customer-specific marketing plans. In addition to marketing to existing customers, the Company also is starting to run its customer data against external lists to find people living close to its stores that do not shop them. The Company can then offer these potential customers direct incentives to visit the stores and become new customers.
Another benefit of the cards is they can reduce promotional expense when attractive item discounts are offered. Because the Company can electronically monitor the number of sale items sold to a particular customer, it can enforce quantity limits. In this way, the Company satisfies its loyal customers and at the same time reduces the number of customers who shop the stores only to buy large quantities of sale items.
Private Label Private label is an important part of the Company's merchandising strategy, offering value conscious consumers quality products at prices below national brands and providing higher margins to the Company. The Company's private label programs include such brands as "Lucky" and "Lady Lee" at Lucky stores, "Lancaster" meats and "Acme" groceries at Acme, "Jewel" at Jewel stores and "Osco" and "Sav-on" at Osco and Sav-on stores, respectively. "President's Choice" in Jewel Osco and "American Premier" in all drug stores are used as premium brands while "Value Wise" is the budget brand across all of the food and drug store operations.
As of year-end 1997, grocery private label sales in the Company's stores accounted for approximately 19% of the Company's total sales - approximately the same as it was in the prior year.
Home Meal Replacement The supermarket industry competes more and more with restaurant and take-out establishments for a share of meals consumed away from home. The Company is experimenting with several concepts to understand customer needs in this area. The Company currently offers various home meal replacement solutions in most of its food stores.
Recently, the Company launched a home meal replacement initiative under the "Without Reservations" TM brand. Strategically located in convenient locations as its own department or as an island display, Without Reservations offers a tantalizing selection in over 17 product categories including entrees, sandwiches, pizzas, wraps, soups, salads and desserts. Items are packaged to take home, heat and serve in the same versatile container.
The key components for success of the Without Reservations philosophy are freshness, quality and convenience. The Company plans to achieve this by carefully selecting and contracting with local food services who use the freshest ingredients to prepare restaurant-style meals. Currently, Without Reservations meals are offered in approximately 100 of the Company's food stores.
Variety and Service Customers in the food and drug industry are becoming more demanding, selective and value-conscious. Competitive boundaries are not well defined in the industry and the Company believes a broad and diverse offering of products and services is essential to meet customer needs today. The table below illustrates the extent of the Company's product and service departments in its stores:
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