Optimizing Promotional Execution
While trade promotion spend by CPG manufacturers continues to increase, retailer compliance is trending downward, especially when performance is measured at the store/day/SKU level.
Clearly promotions are vitally important for both retailers and suppliers. Despite some retailers’ focus on Every Day Low Pricing (EDLP) and the growing emergence of discount retailers, promotions play an integral part in driving category volumes and profitability for retailers. For brand owners, the role of promotions is just as crucial. Promotions can drive volume, steal market share and are key in encouraging shopper behavior to achieve consumer trial and brand switching.
The stakes are high for both retailers and brand owners across the globe. Nielsen reports that in Australia, 40% of total grocery sales were sold on promotion. New Zealand surpassed that with 57% of total grocery sales sold on promotion. This compares with other major markets such as the United States (37%) and across Europe, including the United Kingdom (33%), Italy (27%), Spain (21%), Germany (18%) and France (17%). In addition, StayinFront Retail Data Insight field research has shown that in categories where shopper promiscuity is high, the volume sold on promotion can be as high as 80%.
Against this backdrop, brand owners are investing up to 25% of their gross sales revenues in funding promotional events with a rich mixture of gate fees to retailers, temporary point of sale material and the cost of subsidizing the shopper discount. For brand owners, it is the biggest single expense item on the profit and loss (P&L) statement.
StayinFront Retail Data Insight works closely with brand owners to consider the most common culprits of non-compliance and how to harness the power of retailer POS data to drive promotional ROI by improving the planning, execution and effectiveness of current and future promotions.