Cover Story : One Step at a Time

Successfully?integrating an?e-commerce site into its?retail-centric?organization?has Meijer flourishing

January 2010 By Joe Keenan

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Admittedly a latecomer to the party, general merchandise retailer Meijer (pronounced Meyer) has begun embracing e-commerce. While Meijer.com was up and running for consumers as an informational website since the late '90s, merchandise wasn't available for purchase until September 2007. Better late than never for the Grand Rapids, Mich.-based seller of everything from groceries to pharmaceuticals to electronics and apparel.

E-commerce has benefited Meijer in various ways, but two areas stand out: increased sales, and increased traffic generated for Meijer's 190 "supercenters" throughout its five-state footprint of Michigan, Ohio, Indiana, Illinois and Kentucky. The website is still a work in progress, however, as online sales account for only a fraction of total revenues.

Meijer's top categories online can be credited for upward of 10 percent of all company sales in select product categories, and it's seen weeks when that number swelled to 20 percent. Yet other product categories represent as little as a quarter of a percentage point of total sales.

"Looking at some of our competitors, if we did consistently across the board between 2 [percent] and 5 percent of our general merchandise business online, that would be great," says Tom Nakfoor, Meijer's vice president of e-commerce. "But I can't say that we're there yet, across the board. We're just too new and still growing."

Brand First, Selling Second
When it launched as an e-commerce site, Meijer.com was more about aligning the company's brand — the look and feel consumers experienced online — with its brick-and-mortar locations than being a selling channel. This meant syncing up promotions, pricing and messaging to what was displayed in its stores.

Although comfortable for Meijer's long-time customers, who'd grown accustomed to visiting the company's website to view its weekly ads circular before purchasing in stores, the company knew it had to sell online to compete with the Wal-Marts and Targets of the world.

So Meijer had to help its loyal customers, who often viewed it as their neighborhood retail store, learn that it had more to offer online. Aligning its e-commerce and retail teams more closely allowed Meijer to present a more holistic marketing message to its customers: that Meijer.com was open for business.

To help spread that message, Meijer invested time and money into improving store labeling and signage, store associate training, print and online messaging, and its return process, among other things, to inform and remind customers that if they can't find what they're looking for in the store, they can go online.

"Our challenge is to make sure customers are aware that they can buy many things online, in addition to the store," says Nakfoor. "We're a regional company with our stores and a national company online. Although there's crossover, we can't say that all of our customers are the same. We have to figure out how we take the customers that really love our grocery store, really love our specials in the stores, and give enough of that same look and feel and that same service to them online so that they become Meijer.com customers, too."

Analytics Beget Product Categories
With a 76-year history steeped in brick-and-mortar retail, integrating an e-commerce website into its operations has proven challenging for Meijer. One such cause for concern was how to determine which products in its vast selection should be sold online and which shouldn't. To help it answer that question, Meijer turned to a decidedly modern retailing tool: web analytics.

Meijer first examined which product categories indexed well online by looking industrywide; it then supplemented that data with what Meijer's traditional customers have responded to. And the process is ongoing. Meijer.com, for example, doesn't offer apparel because the company found a lot more challenges fulfilling clothing online than some of its other products. On the other hand, health and beauty products were recently added to the website based on how those products were performing in its stores as well as industry forecasts that there will be a response to that category online.

"A lot of what you pay for to run a retail website is product catalog related and tied to how many things you carry," says Nakfoor. "We're undergoing a process now where we're looking at, 'OK, what have we carried for two years that's costing us more to carry than we're getting out of it?'"

Meijer also is refining its assortments to focus on what's selling. "We're taking a strategic approach at looking at the categories that we didn't offer right away and evaluating them to see, 'OK, now is it time? Can we do business in this category?' And if we can, what subcategories and parts of that category make the most sense," Nakfoor says.

'Price Wars'?Drive Promotions
Following the much publicized price wars engaged in by online retailers leading up to the 2009 holiday season (particularly Amazon.com and Wal-Mart), Meijer was forced to alter its promotional strategy. To that end, Meijer.com featured a special section during the holiday season called "Elf's Daily Steal," where certain products were highlighted each day at significantly reduced prices. Meijer.com also rolled out free shipping offers, free gifts with purchases and showcased products from its weekly circular ads on ?its homepage.

The price wars have "forced us to be more promotional," says Nakfoor. "If you're not offering the hot marketing hook, you're not doing much business today. The whole Wal-Mart approach to who's going to own the category online is presenting a challenge to everybody in those categories. You really do have to pay attention to your competition because online it's so easy for customers to make a decision based on price. If you're not there, you're just not going to do the business."

While acknowledging that Meijer's website has become more promotional lately because of the marketplace, Nakfoor is quick to point out that it must be careful to not let the internet's promotional environment dictate what happens in its brick-and-mortar stores.

Technology Paves the Future
Realizing that it waited too long to enter the e-commerce fray, Meijer's not making the same mistake twice when it comes to social media and mobile. The company has a fan page on Facebook and followers on Twitter, as well as a smartphone app for mobile commerce. Meijer also offers its mobile customers two software widgets — MealBox and WineList — which can be accessed on an iPhone. These applications allow consumers to view products, recipes, wine suggestions, download coupons, enter contests, etc.

That said, Meijer's marketing strategy for social media and mobile is still developing, says Nakfoor. But the company realizes the importance of being out there to connect with customers in vehicles other than more traditional channels such as its website, print ads and TV commercials. Along with its website and email– — where Meijer has a dedicated team working exclusively on email address acquisition– — social media and mobile are being counted on to grow this retail-centric brand.

"Meijer has a great asset in its brand," notes Corbin de Rubertis, president of Qponix, a joint venture between Meijer and Fry Partners focused on web and mobile applications for grocery retailers and publishers. "Although it's not a national brand from a physical retail standpoint, this is changing quickly online."

Meijer, he says, "offers a tremendous assortment from a strong, stable brand with great value to a strong customer-centric culture. And it's constantly looking for new ways to engage and inform its existing and prospective customers. Look for great new stuff in the social and mobile space from Meijer this year."

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