Raley’s jumps into the online “social commerce” business next week, teaming up with a company that delivers Groupon-like discounts on brand-name diapers, soda and other popular grocery items.
The service, a partnership with a Chicago Web marketer called Aisle50 Inc., is expected to deliver discounts of 30 percent or more, said Tom Hutchison, Raley’s director of customer relationship management, marketing and analytics.
He said customers must be members of Something Extra, the West Sacramento grocer’s year-old loyalty program, in order to participate. The deals will be offered through Raley’s website, and the program will launch sometime next week, he said.
Hutchison said customers will pay for the goods online and then pick them up at the store. As long as they key in their Something Extra account number at the check stand, they won’t be charged for the items already purchased through the Aisle50 deal.
He said the program will deliver “great deals ... in a simple way.” The deal will extend to Raley’s two subsidiary chains, Bel Air and Nob Hill Foods.
The program is a fresh attempt to solidify customer loyalty at a time when Raley’s and other traditional supermarket chains are struggling to maintain market share against low-cost competitors such as Wal-Mart. Attempting to head off a strike last year, Raley’s Chief Executive Michael Teel said in a memo to union members that the company was losing millions of dollars because of the rising competition. The union did strike, for 10 days last November, before settling on a contract that is generating cost savings.
The social commerce industry exploded about three years ago but was dismissed as a fad by some marketing experts, especially after industry pioneer Groupon faltered. Groupon lost $67 million last year and has disappointed investors since its initial public stock offering in 2011, although financial results have improved this year.
Aisle50, a 2-year-old company that focuses exclusively on supermarkets, says social commerce works better with supermarkets than with restaurants and other businesses that tend to affiliate with companies such as Groupon. For one thing, shoppers will be able to use the Aisle50 deals at the place where they already shop for groceries.
“We’re not taking (customers) out of their routine – we’re not asking them to go to a taco joint on the other side of town,” said Aisle50 co-founder Christopher Steiner.
There’s also greater buy-in from the food manufacturers – the companies offering the discounts. “This is sustainable, in that this is an industry where discounting is a core part of marketing,” Steiner said Thursday.
Aisle50 already offers discounts to customers of four other grocery chains and has approximately 200,000 regular users, he said. Raley’s represents Aisle50’s first agreement with a West Coast grocer.
After buying a discounted item through Aisle50, customers usually have six to eight weeks to pick it up at the store, Steiner said. Aisle50 will periodically send customers emails to remind them to make their pickup.
He said surveys have shown that about half the customers pick up their purchase within 48 hours, and many shoppers make a special trip just to get their item and then wind up buying other goods. “Our product really does drive people to the stores,” he said.
Aisle50 also offers a “subscription” service, similar to Amazon.com’s, that lets customers sign up for regular deals. Amazon has moved into the grocery business in recent years.
Hutchison said he doesn’t expect any resistance from Raley’s customers even though the company disclosed in June that it was investigating a possible cyberattack on its computer systems. He said the investigation, while not yet final, appears to show that no confidential customer information was compromised.
To kick off the program, Hutchison said shoppers will be offered a free 2-liter bottle of Coke “just to show that it works and to build that trust.”
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler