Out Of Sight, Out Of Mind: Fewer Printed Grocery Circulars Means Fewer Sales

Printed weekly grocery circulars are costly. They’re wasteful. They’re environmentally-unfriendly.

And they work.

Many retailers have been cutting back on their traditional printed weekly ads in recent years. Walgreens, CVS and Target have done it, by going digital-only. But heavily-promotional grocery retailers are much more reliant on their weekly circulars. So they’ve been much more cautious in cutting back.

And it’s a good thing – because a recent study says they stand to lose a lot of business if they do.

A team of American and European researchers detailed their findings in “The Effect of an Ad Ban on Retailer Sales,” published in the journal Marketing Science. They found that even a temporary elimination of printed weekly ads resulted in fewer store visits and a 6% decrease in sales, suggesting that many shoppers who don’t see a physical ad don’t bother visiting the store.

Covid, of all things, made the study possible. In early 2021, one of Germany’s 16 states implemented a ban on certain advertising, when nonfood retailers complained they were ordered to close while grocery stores could stay open and advertise their deals. A compromise measure restricted grocers’ advertising, so all grocery stores in the state ended up not printing or distributing physical weekly ads for three weeks.

“The specific context provided a rare opportunity to study the effects of stopping print advertising,” the researchers explained. So they compared sales data for a national grocery retailer both before and after the ad ban, in the impacted state and in a neighboring state that did not implement a ban.

They found that the ad ban reduced sales by 6%, due to fewer shopping trips. The size of shoppers’ baskets did not change, so those who did go to the store didn’t buy less. Instead, with no circulars to entice them to shop, fewer customers went to the store at all.

“Our results highlight the importance of print advertising for retailers,” the study states. “The 6% reduction in sales resulting from the ban is considerable for the retail industry, revealing the crucial role of advertising in drawing customers to stores.”

Here in the U.S., many grocery retailers quit printing circulars during the early weeks of the Covid pandemic, partly to discourage people from chasing deals instead of social distancing, and partly because they simply couldn’t guarantee any of their promoted items would be in stock anyway. Those print ads quickly resumed. But some have since tried cutting back. Two years ago, Kroger started phasing out the delivery of printed ads via newspapers and the mail, though it promised printed circulars would still be available in stores.

Even before this latest study, though, at least one industry group warned against the idea of eliminating paper ads. “Despite longtime predictions about the demise of retail print circulars, this marketing vehicle is rated as one of the most effective tools,” a 2022 report by FMI—The Food Industry Association noted. A Vericast report that same year found that 81% of grocery stores thought their digital weekly circular would suffice for most shoppers, but less than half of their customers agreed.

And yet, the study’s authors say, even after a 6% loss in sales, some grocery retailers may decide that ending print circulars is worth it. The researchers’ “back-of-the-envelope analysis” indicates that one retailer eliminating all print advertising could save more than 76,000 tons of CO2 a week. At a cost of $185 per ton, that’s a potential weekly cost savings of $14 million – more than the approximately $13 million in lost sales the retailer would experience.

So getting rid of traditional printed weekly ads comes at a cost. But keeping them can be costly, too. In the end, retailers will have to decide for themselves. And shoppers will have to decide whether they still want to shop at a store that no longer offers a paper circular – or shop somewhere that does.