Cover Story : One Step at a Time

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

"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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