With nonpharmacy sales declining at many U.S. drug stores, retailers must find inventive ways to introduce customers to the rest of the store. For some of the nation’s largest drug store chains, personalizing the weekly circular is delivering significant results when it comes to driving more nonpharmacy sales.

Meanwhile, drug store retailers are also motivated to reduce their substantial investments in printed advertising circulars at a time when consumers are spending more time online and on mobile.

Jason Test, Catalina

Modernizing weekly circular strategies is a must. As retailers do so, they should know their options when deciding how to get the most value from their business and marketing efforts. Simply digitizing the weekly circular does not address the potential of personalization to drive incremental trips and increased customer satisfaction.

In this article, I’ll explore five important questions every drug store retailer should ask as they consider how to optimize the impact of their weekly circular.

As background, Catalina conducted a 2016 study analyzing the buying behavior of 27 million U.S. shoppers. This study demonstrated the highly selective nature of today’s shoppers who, on average, buy just 0.6% of all UPCs in a store over a 12-month period.

When looking at the impact of a major retailer’s Easter Day shopping circular, Catalina’s data scientists found that nearly two-thirds of all shopping baskets did not include a single UPC from among the 2,424 advertised items in the circular. This clearly demonstrates how the lack of personalization is a missed opportunity for the retailer.

As I speak with drug store retailers across the country, many are considering alternatives to the venerable printed circular. Here are the five tough questions retailers should ask themselves to gain — and keep — customers’ attention in the evolving marketplace.

• Is your new “digital circular” personalized or just a scanned version of what’s on paper?

If your digital circular is a static digital image of your print circular, you are missing an opportunity. Sure, it’s good to consistently reach customers across multiple channels, and if it reduces the number of printed circulars, there’s an obvious cost savings. However, your shoppers still have to wade through the weekly deals to find the few that are relevant to them — and many won’t bother.

• How personalized is your circular?

“You really know me” is a powerful message we all want to hear from our shoppers. Personalization can be extremely powerful in building long-term loyalty, but it can fall flat or even have negative consequences if it doesn’t truly connect with the shopper. A personalization solution that understands each shopper’s purchase history, and combines that with product-specific scoring algorithms to match the best deals to every shopper, will deliver the most relevant offers to each consumer.

• Does your circular account for individual product purchase cycles?

The most relevant personalized deals are based on a deep knowledge of each shopper’s purchasing history, right up to his or her last shopping trip. That evaluation should occur in real time, notifying shoppers that relevant offers are available when they are ready to engage. Without up-to-date personalization, the deals you promote to any given shopper may cause frustration. For instance, if a shopper buys three months’ worth of a skin care product at full price on a Saturday, and on Monday receives a poorly personalized email circular announcing that the product is “on sale next week,” it could negatively effect the shopper’s perceived value of your store.

A truly optimized personalization algorithm should be able to score every deal both on its relevance to the shopper and when that shopper is ready to make their next purchase (purchase cycle).

• How many shoppers can you reach through your personalized circular?

As the circulation and appeal of paper circulars decline, they will have a diminishing reach and, therefore, far less impact on sales. Meanwhile, many retailers are finding that shoppers are not paying attention to digital circulars (even if personalized) to make up the volume loss. Once the personalization work has been completed, you want to maximize the impact by reaching as many shoppers as possible whenever and wherever they are engaging. The answer is reaching shoppers in their channel of choice — whether it is via email, mobile, or in-store at the checkout, where 100% of shoppers can be reached every time they shop.

• Is your weekly circular optimized for ROI, and can it be measured accurately to gauge effectiveness?

Every marketing dollar invested must deliver clear value. It is critical to objectively measure the impact and return you receive from your circular. Historically this has been challenging for retailers since printed circulars have been distributed both in-store and as newspaper inserts. There is simply no good way to do a proper “test/control” analysis.

Next-generation alternatives have arrived, and they can be accurately measured and optimized to drive profitable volume that moves the needle on both top-line sales and bottom-line profit. To confidently gauge sales impact and return on spend, results should be measured through a strict test and control methodology to ensure the promotion is independent of other marketing programs that may also be boosting sales.

Retailers who ask the tough questions now and optimize their circular advertising for today’s omni-shoppers will certainly benefit from immediate incremental sales lift on promoted items, increased sales to targeted shoppers and increased trips.

In the longer term, they will also improve their capacity to compete in a more complex and fragmented marketplace by building deeper loyalty with customers who appreciate the one-to-one, personalized value and service. The loyalty factor will benefit the pharmacy, as well as the rest of the store.

Jason Test is senior vice president of retail brand development at Catalina. He can be contacted at [email protected].