Despite a significant move to online ads, printed weekly grocery circulars have remained a mainstay of supermarkets, which spent more than $11 billion on newspaper circulars alone last year.
A Tucson-based tech startup wants to replace those weekly ads with personalized, digital grocery circulars shoppers can use to get deals on what they buy most via the Web.
Recoleta Digital Media (www.recoletadigitalmedia.com) got a key boost recently when it was awarded a $250,000 grant as a winner of the Arizona Commerce Authority’s annual Innovation Challenge.
Recoleta founder and CEO Alan Alexander said the company will use the grant money to help launch its “Personal Grocery Circular” in the coming year.
“It’s terrific for us because it allows us to accelerate progress and begin moving into the marketplace,” said Alexander, a longtime ad-agency exec who teamed up with local media pro Steven Auslander to launch Recoleta.
He said Recoleta has been working with one supermarket chain to launch an initial personal grocery circular, sometime in the first or second quarter of this year, and has had talks with several others. Alexander is keeping the name of the company’s pilot partner, as well as samples of the digital circulars, under wraps until a formal launch.
“There’s a lot of interest in the marketplace in what we’re doing,” he said.
Recoleta’s “Personal Grocery Circular” system is designed to help grocers reach loyalty-card members with targeted product offers. The digital platform combines and presents “individually relevant” discount offers to store loyalty-card members and allows them to access weekly deals and digital coupons via email link, mobile smart devices and grocer websites.
“What our personal circular is doing is really picking the sales that are most relevant to them,” he said.
Alexander knows more than a little about the grocery business. He spent 20 years with ad-agency giant DDB-Chicago, handling ads and marketing for packaged-goods giants including General Mills,PepsiCo and Heinz before leaving as executive vice president and managing partner of the firm in 2001.
He came to Tucson seeking new ventures and started Dog Dog Boy Advertising in 2003 among other projects.
Alexander had been working on the idea of a personalized grocery circular and later met Auslander, Recoleta’s chief technology officer, through Auslander’s wife, who worked for an advertising client. Auslander has run his own media firm, Enterprise Media, in Tucson for the past 17 years. (Auslander is no relation to former Arizona Daily Star Editor Stephen E. Auslander.)
The idea of replacing printed grocery circulars with digital media isn’t new. Supermarkets have been posting their weekly ads online and using email to personalize discounts and coupons for years, and companies like MyWebGrocer already provide digital ad services to many major supermarkets.
Yet people still want their print ads — along with digital options. In a 2011 study by Nielsen, nearly 70 percent of shoppers said they look at printed paper material either mailed to the home or in newspapers at least once per week to find sales, topping email at 67 percent, website ads at 45 percent and smartphones at 39 percent. Nearly 90 percent of the 11,000 shoppers surveyed said they want newspaper, mail or in-store print ads in the future, compared with about 70 percent that wanted email and website options and around 30 percent who want smartphone ads.
But those sentiments may have shifted in the nearly three years since the Nielsen survey, as smartphone and tablets have continued to boom in popularity and some grocery chains are forging ahead with their own digital ad plans.
Safeway offers a program called “Just for U” that offers personalized deals that its loyalty-card members can upload to their card accounts, so they get special deals at the register. More than 5 million customers are enrolled in the program, Safeway says.
Alexander says Recoleta’s plaftorm uses a patent-pending algorithm — software code — to generate 150 customer-specific offers weekly based on prior spending habits.
Most supermarket chains aren’t in a position to launch their own programs in-house.
Recoleta has signed on some other key advisers and investors.
The company’s lead industry adviser is Mike Proulx, former chief operating officer of Chandler-based Bashas’ Supermarkets. The company’s board includes several e-commerce veterans as well as Emre Toker, mentor in residence at the UA’s Eller College Of Management and a longtime startup mentor and investor.
Alexander said he is Recoleta’s principal shareholder, along with Auslander and a group of mostly local “angel” investors. Toker and Alexander both are members of the Desert Angels, a very active local private investment group.
As the company ramps up its development efforts, Alexander said the state Innovation Challenge grant will fulfill its purpose of helping to drive economic development.
“We’re going to need to hire people, and we’re going to create some really high-quality jobs,” he said.
While Alexander envisions the personal grocery circular catching on, and other forms of digital supermarketing expanding, print will be around for the foreseeable future, he said.
“Print still is very much alive, and print isn’t going to go away soon,” Alexander said, some solace perhaps to the ink-stained wretches of the newspaper industry.