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Natural Foods Merchandiser

Stretching ad dollars during a recession

By Janet Day and Angela Cortez

In hard times, the easiest decisions may not be the smartest ones. Cutting advertising and marketing in slow economic times seems to make sense, but the benefit is fleeting.

"Now is definitely a time when you can gain share because there are fewer people advertising," says Beth Wampler, president and creative director of AOR, a Denver marketing firm. "There's less noise out there—take advantage of it. You have to stay in front of people. You want them to know that you exist and will continue to exist. As the economy recovers, people will see their efforts in the down times bear fruit."

Michael Pelton, president of Inner Circle Sales, a Glastonbury, Conn.-based business consulting and marketing firm that counts a number of naturals supermarkets among its clients, agrees and adds that now is a great time for retailers to renegotiate ads and ask brokers and manufacturers to help with stores' marketing efforts.

"Ask manufacturers for free samples and in-store demos, and shift more ad dollars to things that have a direct return," Pelton says. He says retailers can make advertising dollars go further with the following tips.

Monitor the competition. See what stands out. It can spark new ideas like promoting a product the competition isn't carrying.

Create a tangible network. Consider partnering with like-minded businesses or businesses in close proximity. For example, a supplements store and a backpack retailer could pool advertising dollars on a campaign promoting energy or weight-loss products.

Create a local network and support buy-local efforts. Promote other business owners in stores and barter within the network for services like printing or photography.

Review other networking groups. See what's out there in terms of new business associations or established chambers of commerce.

Reevaluate print-advertising terms. See if newspapers and the Yellow Pages will cut a better deal to keep your business. Now is the time to lock in a new rate.

Host a radio show. Check with the local radio station—you may be able to pay a fee and create a regularly scheduled program.

Develop a plan
Marketing doesn't have to mean expensive newspaper ads or radio spots. "Retailers should be reevaluating their business from top to bottom to squeeze out any inefficiencies or systemic problems," Pelton says. "Our local weekly paper offered to track down potential co-op ad dollars for us and start the ball rolling as far as paperwork to qualify," says Courtney Carpen-ter, consultant on human nutrition for David's Natural Market in Columbia, Md. "This may be the real winner in the bunch because it is a win-win. Papers are hurting for advertising right now, and all retailers have to do is provide some basic contact information for leads."

Wampler says you should also consider a referral program in which existing customers win something for getting someone else to visit the store or sign up for emails.

"Sponsorships are another great way to get a company's name in front of the public," she says. "Find a local event and sponsor a part of it. Find out what nonprofits in your area are doing, what fundraisers they're having and get your name out there."

"The key is to find what's affordable, what's reasonable and what works in a down time," Wampler says.

Michael Kanter, owner of Cambridge Naturals in Massachusetts, is stocking the best products and displaying them well to encourage existing customers to spend more money in his store. His efforts are working: Customer count and sales are up. But he also believes slashing an advertising budget out of fear is a mistake.

"When the economy is down, you want to be that much more targeted in that approach," Kanter says. "But don't be too reactive in cutting ad spending. You need to get past that and think creatively. Cut back on certain ads that aren't working, but keep others. Target differently, because when you pull back, it can be a cascade toward failure."

A McGraw-Hill Research study of the 1981-82 recession found companies that continued to advertise saw more than 200 percent growth by 1985 over competitors that reduced or eliminated advertising.

5 ways to lessen your insurance premiums
Insurance reduction can help you scale back operating costs. The trick? Adjusting your policy so your needs are still covered. Lower your premiums with tips from Sean Slater, of State Farm Insurance in Centennial, Colo.

  1. Implement a loss-control program. Make sure your employees are educated on different safety issues at work. Do they understand protocol on injuries and workers' compensation? How about a procedure on stocking products safely?
  2. Install various safety systems. Fire-suppression systems like sprinklers or smoke detectors, passive-security systems like a motion detector, and all types of alarm systems can shave costs off your insurance premiums.
  3. Go in for a checkup. You could be incurring costs without knowing it, and some plans that you need one year, you may not need the next. Slater recommends visiting your agent annually or every other year to review your policy. "We see a lot of these stores that have been around for ages that have the wrong type of coverage," he says.
  4. Look at the deductible amount. Can you afford to pay a higher deductible? By increasing the amount you'll owe in case of an accident, you'll pay less for your monthly premium.
  5. Have common sense. The better maintained your building is, the cheaper your insurance. Make sure entryways are clear of tripping hazards, spills get cleaned up in a timely manner and the building is compliant with the Americans with Disabilities Act. These routine tasks will prevent a claim should someone get hurt on the premises.

—Morgan Ralph Bast

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