Those of you who have read my posts for a while will know that I’m not a big fan of in-store promotions. Well, promotions are all in the news again. But this time it is retailers talking about doing fewer in-store promotions, not more. Some large retailers in the UK have announced that they will stop doing multibuys (such as the infamous BOGOF – buy one get one free). Others are saying that they want more stable pricing which will ‘make pricing more transparent for the shopper’. Bless those retailers. They’re doing this to make it simpler for the shopper, eh? Or do they have other motives? And what does this mean for manufacturers? In this post I’d like to explore the good and the bad of this development, and you’ll have to read to the end to find out why this is in fact, really good news, and what trade marketers and key account managers should do to really capitalize on the situation.
Fewer in-store promotions is good news for brands
Promotions are, overall, not very good for brands. Or rather, the way they are currently used doesn’t help much. Promotions drive extra costs into the supply chain, erode brand loyalty, and often cause out of stocks. Reducing promotions, especially the extreme ones, would therefore be a good thing.
Fewer in-store promotions isn’t all good news
But before we pop champagne corks, let’s pause. Retailers will still want to compete. Secondly, retailers seem hell-bent on competing on price. Thirdly, most retailers will expect their suppliers to foot the bill for this pricing activity. I don’t think that this is a case of ‘better the devil you know’ but until we know what comes next, it is hard to say. Retailers doubling down on fierce price competition can erode margins and brand value in much the same way as excessive promotions. So until retailers step away from deals and pricing as their key marketing weapon, it’s probably not all good news for manufacturers.
How should brands respond to changes in in-store promotions strategy?
Firstly, embrace reality. It is what it is, and retailers will call the tune to some extent. Whether good or bad on the whole, the opportunities and threats lie in what we do with the situation. Here are three fabulous ways for trade marketers and key account managers to create opportunity from changes in retail in-store promotions strategy.
Change is an opportunity to influence
If you think that this is a chance to cut the total expenditure at trade, then you might be disappointed. But it is a chance to change the way it is being spent. Norms will be pushed to one side. There is a clear opportunity to go to customers with a new shopper marketing agenda of how you think that spend should be spent. If you don’t have an agenda, now is the time to create one!
Remember that change is a constant
Back at the beginning of my career I worked in the United Kingdom on the Tesco account for a large food manufacturer. I remember a time that Tesco said they were culling BOGOF deals. I also remember a time when they said they didn’t want us to fund promotions: just a simple, low price that was simple and clear. Today the stores are full of BOGOF deals, and promotional funding is back. Whatever happens today isn’t necessarily destined to last.
The best news about fewer in-store promotions – Plan what you will do with your time
One of the biggest hidden costs of a heavy promotion calendar is time. Whenever I talk to shopper marketers, trade marketers and key account managers, they invariably say that planning and executing promotions take more time than any other activity. So if promotions become simpler, or even fewer, then the biggest opportunity is to do something far more valuable with that time. The change in retail strategy won’t in itself drive profitability, but if managers can use their time to ‘lift their game’ – to plan, to be more strategic in the way they approach, then perhaps this could be the best thing that has happened to the consumer goods industry in decades. If you’d like to know more about how to put your time to more strategic usage, check this out
