Saturday, March 7, 2009

Google & Yahoo - The Tale of the Search Engines: An Analysis of How Tesco's Fresh & Easy is Losing Out By Not Accepting Manufacturers' Grocery Coupons

Earlier today we wrote and published this piece [Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track]. One of the seven retail operations changes we suggest in the story, and have been suggesting for at least a year, is that Tesco's Fresh & Easy Neighborhood Market change its policy of not accepting manufacturers' grocery coupons in its stores.

In the analysis below, we take a look the fast-growing trend among U.S. consumers to use the Google and Yahoo search engines to find grocery coupons, so they choose specific item coupons, print the coupons out, and use them at the grocery store in order to save money on their food and grocery purchases.

Today, Saturday, generally is the top shopping day for consumers to do their food and grocery shopping. It's a day off work for most Americans, and in most households it's what can be called household chores and errand-running day.

Fresh & Easy Buzz has for many months been writing about and offering analysis on what we call the mega-increase by American consumers in the use of manufacturers' "cents off" grocery coupons, those little slips of paper that come in the mail, are inserted in Sunday newspapers, and increasingly are available on the Internet at a multitude of coupon Web sites.

To show you just how popular the use of manufacturers' grocery coupons are becoming in the current economic recession, the search term "grocery coupons" is today the fourth most-searched term on Yahoo Search, just ahead of the actor Vince Vaughn (number five) and right after the actress Leelee Sobieski (number three most-searched).

And, what's up with Actress Carla Gugino that makes her the most-searched on Yahoo Search? You'll have to click her linked name on the top-ten list below to find out what all the fuss about her is.

Today's Top Searches on Yahoo Search

Google Trends for 'grocery coupons'

One way to demonstrate the dramatic growth in consumer interest (and use) in grocery coupons is to take a look at the search volume (for the U.S.) for the search term "grocery coupons" using Google Trends' "Search Volume Index," the analytical tool uses to rate and rank searches on its search engine.

The graph above (click here to view the graph) depicts the volume of Google searches for the search term "grocery coupons" from 2004-2008 in the entire U.S.

Notice the beginning of the spike in the number of searches starting in late 2007. The current recession officially began in December, 2007, according to the economic group charged with determining when recessions start.

Additionally, note the almost continual increase in searches throughout 2008, particularly the huge spikes in mid and late 2008. The financial and credit crisis hit hard beginning in about September-October, 2008 -- and it has been downhill in terms of the deepening of the recession since then. (Note: read the top portion of the graph, where it says "Search Volume index." The bottom portion of the graph measures the volume of news media searches.)

The graph pictured above (click here to view) is for 2008 (total U.S.). It shows a dramatic spike in searches for "grocery coupons" in October, right about the time when the financial crisis hit, then a trending down, and then another spike at the end of the year, the holiday period.

In 2008, the top ten states in which consumers searched "grocery coupons" on Google were: (1) South Carolina, (2) Kentucky, (3) Mississippi, (4) North Carolina, (5) Tennessee, (6) Alabama, (7)Georgia, (8) New Hampshire, (9) Missouri, (10) Arizona.

Seven of the ten top Google-search states are in the southern U.S. One, New Hampshire, is in New England in the east. The other two, Missouri and Arizona, are in the Western U.S.

Tesco's Fresh & Easy Neighborhood Market has stores in one of the top ten states -- Arizona. The other two states where Tesco has Fresh & Easy stores are California and Arizona. After California, Arizona has the second-highest number of Fresh & Easy markets. There currently are 115 of the small-format, convenience-oriented, combination grocery and fresh foods stores in the three states.

The graph pictured above (click here to view) is for 2009 thus far (all U.S. states). Note the significant spike in the graph for February.

Thus far this year, the top eight states for consumer searches on Google for "grocery coupons" are (1) North Carolina, (2) Georgia, (3) Ohio, (4) Texas, (5) Florida, (6) New York, (7) California, (8) Pennsylvania.

Notice that California, where Tesco operates the majority of its 115 small-format Fresh & Easy Neighborhood Market grocery and fresh foods stores, thus far this year has the seventh-highest amount of Google searches for "grocery coupons." About half of the 115 Fresh & Easy markets are in California.


Let's take a specific look at California, the largest state in the U.S. and home to Tesco's Fresh & Easy, specifically in terms of the volume of searches on Google for "grocery coupons.

The graph pictured above (click here to view) is for all of 2008. Note the major upward spike in June, 2008, then a steady trend, then a huge drop, followed by a major upward spike in September-October, 2008, when the financial and credit crisis hit big.

The following California cities and metropolitan regions had the highest volume (listed in rank order from first -to- 10th) of Google searches for 2008: Riverside, Rancho Santa Margarita, Long Beach, Santa Barbara, Irvine, Los Angeles, Pasadena, Bakersfield, San Luis Obispo and Fresno.

Tesco's Fresh & Easy currently has stores in each of these metropolitan regions except for Santa Barbara, San Luis Obispo and Fresno. It has plans to open stores in the Santa Barbara and Fresno regions in the very near future, and longer range plans to open stores in the San Luis Obispo region.

Since the grocery chain has numerous stores in the metro regions listed above that have the highest volume of "grocery coupon" searches on Google, and since most of the searches are for manufacturer's "cents off" grocery coupons on the Internet, rather than store coupons like Fresh & Easy offers, it's our analysis that by not accepting the manufactuers' cooupons, the grocer is missing out on all these shoppers who are searching Google for "grocery coupons," which it's rather safe to assume they then download, print out and take with them to the grocery store.

Our safe assumption that consumers aren't just looking at the coupons online, but rather going online to find the coupons and print them out, is backed up by statistics that show coupon use at all time highs throughout the U.S., including in California, Nevada and Arizona, where the 115 Fresh & Easy stores are located.

Above is California thus far in 2009 (click here to view). It's safe to say consumer-Google-users in California are pretty grocery coupon-focused so far this year, based on the data.

It will be interesting to see where the trend line goes once March is over and Google is able to include the full month data. The graph only includes seven days in March thus far, obviously. We suspect the trend line will go up more than it drops, as grocery coupon use continues to increase, and manufacturers' continue to distribute more coupons as a way to keep and increase sales of their respective brands in the recession.

Now we turn to Arizona. Above is a graph for 2004-2008 (click here to view), depicting the volume of searches on Google for "grocery coupons" from consumers-Google users in Arizona. Note the huge spike in search in late 2008.

Additionally, this graph for 2008 shows a steady upward trend for Arizona in the volume of Google searches for the coupons in 2008.

Lastly, this graph depicts searches thus far in 2009. There are some peaks and valleys, and currently the trend is headed very much upward in coupon search volume.

Thus far this year these are the top seven (in ranked order) Arizona cities in terms of having the highest volume of coupon searches on Google: Pima, Tempe, Chandler, Phoenix, Mesa, Tucson and Scottsdale.

Tesco has Fresh & Easy stores, or will soon have stores, in all of these cities except for Pima (at least that we are currently aware of in the case of Pima.)


The graph pictured above (click here to view) shows Google coupon search volume for 2004-2008 for the state of Nevada. Note the major growth trend beginning in late, 2008.

You can view all of 2008 by itself in this graph. Coupon search shot up considerably beginning in about October, 2008.

The top three Google-search cities for 2008 were (in rank order): Carson City, Las Vegas and Reno.

Carson City and Reno are in northern Nevada. Las Vegas is in southern Nevada. All of the Fresh & Easy stores are in the Las Vegas region in southern Nevada, where the vast majority of the state's residents live.

The fact that so many consumers in the Las Vegas Metro region were searching for coupons on Google in 2008 demonstrates how Tesco's Fresh & Easy is missing the boat by not accepting the manufacturer's "cents off" grocery coupons in its stores in Nevada (as well as in Arizona and California.) Those consumers that printed out the coupons took them to one of the grocery chain's competitors in the Las Vegas market region, where they used them to shop.

Lastly, this graph depicts the Google search volume thus far for 2009 for coupons. There was a huge spike in late February with the line now trending down. However, that's largely due to the fact we are only seven days into March.


It's increasingly said that as Google goes (and to a lesser but significant degree Yahoo Search and search in general), so goes the country -- and the world. Online search has revolutionized the way consumers live their lives and shop.

And as our analysis demonstrates, consumers are increasingly using manufacturers' grocery coupons and turning to search engines like Google and Yahoo Search to find the coupons online, download and print them out, and take them to the grocery store to use when they do their shopping.

It's all about pinching pennies and trying to save a buck in this severe recession. But it was a very popular consumer practice pre-recession as well.

Therefore, those grocers that accept the coupons, which amount to nearly 100% of all major food retailers in the U.S., are the ones who are benefiting, and will continue to benefit, from this fast-growing trend.

Meanwhile, Tesco's Fresh & Easy, which by company policy does not accept manufacturers' coupons from shoppers in its stores, will continue to lose out on the growing sales volume that comes from shoppers who choose where they shop to a significant degree (and since nearly 100% of all grocers take coupons it's not an issue for the majority of retailers) based on the fact they will be using the coupons as one of the ways of saving money on their food and grocery purchases in these trying economic times.

The trend is great for Fresh & Easy's competitors, since all of them accept the coupons. It's not so great for Fresh & Easy, since as a matter of policy and strategy it believes achieving the minimal savings in store labor required to handle the manufacturers' coupons from shoppers trumps the benefits of accepting them, and the added sales and customer loyalty doing so brings a food and grocery retailer.

Since about 100% of the grocery chains and independents (including Wal-Mart) in California, Nevada and Arizona take the manufacturers' "cents off" coupons -- and even encourage the use for promotional purposes -- these being Tesco Fresh & Easy's competitors -- might they collectively all not be on to something? Might the rule therefore be good retail operations strategy and the acception -- Tesco Fresh & Easy's no manufacturers' coupon policy -- be a bad one? We think so, as does the marketplace.

[Editor's Note: We've included links to the original Google Trends graphs for each of the graphs pictured in this post. Since the search data is dynamic, there will be changes in the original 2009 linked graphs over time compared to the 2009 graphs pictured in this piece. That's because as new search data is incorporated by Google into its search trends data base, the graph trend lines change. The 2009 graphs pictured in this post therefore are a snapshot in time, that time being when this piece was published this afternoon.]

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