RetailWire BrainTrust post: Big G's Groupon Test Called a Success

On RetailWire, there is a discussion about the recent General Mills Groupon test. 

The discussion questions were: "What do you think of General Mills test of Groupon? How likely are daily deal sites to become part of the promotional mix of CPG marketers going forward?"

Here is my response:

Kudos to Groupon and to General Mills for trying something new. The Groupon-style social-buying model has gained enormous traction outside grocery, and it's inevitable that it will have an impact within grocery too. The question is what form social buying will ultimately take in the grocery vertical, and who (Groupon, one of its competitors, or an entirely new company) will emerge as the leader in this space?

That said, there are some issues that I as a marketer for General Mills would want to understand about this trial:

1) Did the deal change shopper behavior? Were shoppers who bought existing General Mills customers, or were they new? If existing, did the deal cannibalize those shoppers' normal General Mills purchases, or was it truly incremental? If they were new customers, did the shoppers continue to buy the specific items in the package? Sure, with the right planning, subsequent redemptions of the included coupons could give some insight into some of these questions, but without tracking the individual households' full shopping history before, during and after the deal, you're only getting a partial view. Absent these metrics, these types of deals will stay in the realm of tests and experiments, not ongoing programs.

2) How would this scale? The 5,000 consumers impacted, were, at the end of the day, fewer shoppers than buy General Mills items every day in even a small regional grocery chain. Grocery stores have mastered the art of large-scale distribution, and the economics of a UPS or FedEx truck will be crushed by the economics of Walmart's, Kroger's, or any other chain's highly refined supply chain.

3) How do chains (and the brand's own sales team) feel about the channel conflict? Selling direct to consumer (even through a third party like Groupon, Amazon grocery, Alice.com, etc.) is an explicit end-run around the grocery retailer and the sales organization that services that channel. I imagine that if this were to become anything more than a "sampling program" (which, as David Diamond points out, it may do quite well), it would encounter some stiff resistance within General Mills itself. 

You can find all my RetailWire BrainTrust comments on my RetailWire blog.