What does it take to produce promos that pop?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.
Trade promotion drives traffic and remains the go-to lever for short-term sales increases for grocers. But research shows promos have become less effective at driving lift as consumers have become accustomed to buying on discount and expecting ever-bigger deals.
Many shoppers also don’t have time to shop multiple grocers for deals and head straight to their nearby hard discounter or club store for everyday low prices. Other factors being attributed to promo weakness include shopper visits increasingly geared towards more immediate consumption at the expense of bulk deals (i.e., “10-for-$10”) and less shopping taking place at the center store where many promoted items are shelved.
Industry experts believe retailers need to elevate their promotional game and be more creative.
“It’s not a one-size-fits-all proposition,” said Bob Shaw, founding partner of Concentric Marketing.
Colin Stewart, SVP of business intelligence at Acosta, said, “The strategy should include [a determination of] which categories and brands will drive traffic into the store, which categories and brands will drive shopper loyalty and which categories and brands will drive larger shopping baskets.” Fortunately, he adds, retailers have a variety of new predictive tools at their disposal to help inform their strategies and make decisions around promo timing and price points.
Targeted, customized offers should be a big part of any strategy to help support trial, purchase frequency or re-engagement, experts agree. Joan Driggs, VP of content and thought leadership at IRI, stated “[Shoppers are] looking for more relevant discounts and communication.”
The best promotions will actually combine traditional storewide promotions with personalized digital overlays, believes Jim Hertel, SVP at Inmar Analytics. He said, “We think targeted digital promotions that hit really price-sensitive consumers work very well when they’re integrated with more moderately discounted in-store promotions.”
Another strategy popular with the experts is cross-promoting with complementary products.
Still, it’s not uncommon for a grocer to repeat last year’s plan. Heavy discounting has also become the default response to sluggish sales because, quite simply, it’s easy. “While ROI might never be there or you end up rewarding customers who would be buying anyway, it still creates the most direct, provable lift,” said Mr. Shaw.
DISCUSSION QUESTIONS: Do grocers need to wean themselves off discounts as the main pillar of their promotional strategy? What suggestions would you add to those in the article for maximizing trade promotion efforts?