Finding the sales
SCI-TECH SCENE | Grocery Shopping Network gives buyers head start online
Even experienced grocery shoppers trying to meet today's tightened budgets can get overwhelmed with figuring out how to find the best deals among 50,000 items in a typical store.
After all, 8 to 10 percent of the 50,000 items are on sale each week and of those, 1 to 2 percent are displayed in circulars, experts say.
(Rich Hein/Sun-Times)
Andy Robinson, founder and CEO of Minneapolis-based Grocery Shopping Network (GSN), said he experienced a "Where's Waldo?" feeling when he entered the grocery store -- what's on sale for me?
Robinson, who had worked in advertising and marketing services, realized that the Internet could help shoppers figure out what was on sale before they went to the store, and get instant recipes and coupons to make the experience more valuable.
The resulting technology venture, Grocery Shopping Network, got its start with funding arranged by Chicago-based Houlihan Smith & Company.
The Grocery Shopping Network aims to give local grocery stores an edge over discounters by providing them online advertising, planning and search-and-shop features.
The network serves local stores such as Ultra Foods and Strack & Van Til.
The grocery stores' Web sites don't compare prices at different supermarkets because research shows shoppers don't have the time or extra gasoline money to travel to a variety of stores, Robinson said.
Instead, shoppers can see online their favorite grocery store's inventory, including sale items advertised in circulars and those posted in the aisles.
A shopper who uses a loyalty card at a GSN-participating store gets his or her own list of specials based on his buying history for the past six months.
That's because the technology parses the shopper's six-month history from the store's cash-register logs and spits out a customized list. The technology was created by Motorola's radio frequency identification firm Symbol Technologies.
When a shopper clicks on an item on sale, he also gets a manufacturer's coupon if one exists, as well as recipe and menu suggestions.
Grocery store managers say coupons in general can be a hassle because so many out-of-work and financially desperate shoppers try to pass off fradulent copies. But GSN says its coupons are readily identifiable by their bar codes.
The Grocery Shopping Network picked up the recipe technology when it bought defunct UCook.com and its 60,000 kitchen-tested recipes. The technology lets shoppers create profiles so that their menus exclude forbidden foods or allergy-inducing ingredients. Shoppers can also watch cooking videos from the Culinary Institute of America.
Robinson is part of a deep-bench management team that includes Executive Chairman Richard Andolshek, a third-generation food retailer and former CEO of retailer Sports Shack, and Chief Marketing Officer Curtis F. Lund, a 30-year industry veteran who has authored the marketing direction for grocery franchises and loyalty programs.
The company employs 40 and, though profitable in the past, is now in a growth and development phase that has wiped out the profit.
Richard Houlihan, founder of Houlihan Smith & Co. Inc. in Chicago, said he set up a $7million investment in GSN led by venture capital fund VantagePoint Venture Partners because "there's such a huge universe for [GSN] to attack." VantagePoint's investment makes it a 25 percent owner of the Grocery Shopping Network.
Shoppers nationwide spend $600 billion yearly on groceries, and the market needs to better leverage technology, Houlihan said.
Of the nation's 20,000 chain grocery stores, 1,700 have signed on to use the Grocery Shopping Network's technology to customize their Web sites. Those 1,700 stores represent 17 million households. Of the 17 million, 10 percent are using the GSN-enabled sites on a day-to-day basis, Houlihan said.
Another 2,500 grocery stores participate in GSN's ad display network, which is similar to Yahoo! and AOL's Platform A display ad network. GSN charges on a cost-per-action and cost-per-1,000 impressions basis for targeted advertising that's placed on a grocery store's Web site.
"[The Grocery Shopping Network] has breached the market and is showing great growth," Houlihan said. "It's on a growth curve in revenues and statistics that is almost exponential."
Bill Bishop, chairman of Willard Bishop LLC retail consultancy in Barrington, said the grocery-store Web sites are hitting a sweet spot because ''people are working harder than ever before to find value.''
Grocery Shopping Network is looking ahead to support technology that will load coupons onto shoppers' loyalty cards on the grocer's Web site. No date has been set for the launch.
Executives say it will be an efficient way to redeem coupons because shoppers automatically get savings with the card, and won't have to worry about carrying a printed coupon or a mobile phone.