LONDON: FMCG manufacturers and retailers need to reassess their promotion strategies as the current approach is failing to lift volume sales across Europe, an industry figure has advised.
In the current issue of Admap, Tim Eales, UK director of strategic insight at market research business IRI, said that FMCG goods sold on promotion accounted for 27.5% of all European FMCG sales last year.
In the current issue of Admap, Tim Eales, UK director of strategic insight at market research business IRI, said that FMCG goods sold on promotion accounted for 27.5% of all European FMCG sales last year.
He also pointed to a 0.7% decline in volume sales in food categories and a 0.8% decline in sales in non-food categories.
He argued that "much of the money put forward by manufacturers is at worst being wasted and at best not generating the return in volume sales that everyone craves".
Changing shopper habits – more frequent and smaller shopping trips – also tend not to work with the sort of 3-for-2 deals that have been a promotional staple for some years.
Eales highlighted those types of promotion that do still work and considered options for the way ahead.
Thus, transparent round pound/euro offers make it easy for shoppers to understand the genuine savings and to keep track of their budget. And, he added, IRI research had shown the sales uplift on round euro promotions to be greater than an equivalent discount that did not take the price down to a rounded price point.
Leaflets continue to bring positive results and are often used in Spain, France and Germany, where shoppers are increasingly using price comparison websites to source the strongest deal.
In terms of innovation, Eales saw themed offers, experiential in-store events and the use of mobile apps as ways to drive people to spend and deliver value for brands and retailers alike and stand out to promotion-weary and savvy shoppers.
Investment in analytics solutions will help in deciding which offers to run and where to implement them. This can also take into account the different buying behaviour consumers display offline and online.
Eales cautioned supermarkets against artificially inflating prices in order to be able to claim a later attractive discount. "Consumers have had concerns about this practice for years and this has damaged the effectiveness of some promotions," he said.
He argued that "much of the money put forward by manufacturers is at worst being wasted and at best not generating the return in volume sales that everyone craves".
Changing shopper habits – more frequent and smaller shopping trips – also tend not to work with the sort of 3-for-2 deals that have been a promotional staple for some years.
Eales highlighted those types of promotion that do still work and considered options for the way ahead.
Thus, transparent round pound/euro offers make it easy for shoppers to understand the genuine savings and to keep track of their budget. And, he added, IRI research had shown the sales uplift on round euro promotions to be greater than an equivalent discount that did not take the price down to a rounded price point.
Leaflets continue to bring positive results and are often used in Spain, France and Germany, where shoppers are increasingly using price comparison websites to source the strongest deal.
In terms of innovation, Eales saw themed offers, experiential in-store events and the use of mobile apps as ways to drive people to spend and deliver value for brands and retailers alike and stand out to promotion-weary and savvy shoppers.
Investment in analytics solutions will help in deciding which offers to run and where to implement them. This can also take into account the different buying behaviour consumers display offline and online.
Eales cautioned supermarkets against artificially inflating prices in order to be able to claim a later attractive discount. "Consumers have had concerns about this practice for years and this has damaged the effectiveness of some promotions," he said.
Data sourced from Warc
