Most grocery retail promotions are ineffective. Let’s say that again. I think it’s worth hearing twice. Most of the resource spent on promotion in store, mainly price based, does not really achieve much.
Shoppers who buy on promotion stockpile or buy something cheaper than they had already planned to buy anyway. Even where a shopper changes brand based on a promotional offer, it rarely does anything for brand equity. Promotions erode loyalty by their very nature, encouraging brand switching, breeding a shopper chasing a deal.
A Gap in Your Profits
Look what had happened the Oral Care category. Over promoted, and now most shoppers only buy on deal, stockpiling their favourite toothpaste brand or switching between preferred brands. Few ever buy at full price leaving an enormous ‘gap’ in the category profit potential.
So why are price promotions all pervasive? Why are the brand and retail trading managers of grocery steering the ‘equity’ ship onto the rocks together? That is a question worth another blog post I think, as there are too many driving factors. But the demand by shoppers for personalization is going to challenge this norm.
Machine Gun v Rifle
For too long brands have been using the wrong weapon, missing their target. For too long they have been using a ‘machine gun’ when now we have the data and the technology to make the change to a ‘rifle’ possible.
To promote their product a brand cuts price, builds a display and offers it to every shopper. They plant their two feet and using this blunt ‘I hope I hit something’ approach, use their machine gun. They waste a massive amount of resources ‘spraying’ the market. They try and convince me to buy Pet Treats for the cat or dog I don’t own. Bullet after bullet missing the mark, empty shells all over the floor. Hoping that a passing shopper might buy. In fact most buying were going to buy anyway, the price offer a wasted bonus from everyone’s bottom line.
It is time we used our promotion ‘ammunition’ a bit more wisely. It is time we learned how to fire a rifle. A weapon that sights its target, chooses an appropriate ‘bullet’ and delivers. We have so much data via loyalty and transactional data on what shoppers buy, how often and in what quantity. It is time promotion became far more strategic as opposed to tactical.
Strategic Personalised Promotion
I can see from your purchase data history that you buy healthy breakfast cereal. So I send you an offer for a new product in that range. I see you buy ambient groceries every week from me but rarely meat from the butcher counter. So I send you some offers every week for 6 successive weeks for fresh meat. I want your meat business back. But I don’t send the same offers to another shopper who already buys meat every week in my store. They get an offer on wine as an up-sell (their average wine purchase is €8 so let’s get them tasting some €12 for the €8 price point for a few weeks to see if we can tempt them up thereafter)
And so on. Each promotion tailored to change behaviour. To reward or recruit. To have a ‘strategic’ objective. To build footfall, brand equity and educate. And this is what shoppers want too
Who, Where, What
They want to be spoken to as individuals not as a ‘market’ or ‘segment’. Using a simple blend of iBeacons, an App and your Smartphone we know who you are and where you are in-store. Add your purchase history via loyalty programme data to that we know what you want, and now we can really activate relevant offers on a one-to-one basis, as you pass a particular point. In a market where we know who a shopper is, what they want (based on historical transactional or behavioural data) and where they are, there is nothing stopping us. It is information a retailer from 30 years ago could only fantasise about
“Hi. Remember that recipe you looked at on our App 2 days ago. Why not make it tonight. The ingredients are right in this aisle. And as a reward for your loyalty, here’s a coupon for the sauce”. The right offer to the right person at the right time. Sounds easy and in fact it is. All the technology and supports are all available to do this tomorrow in most stores.
It’s time to use this technology creatively and put down the machine gun. It is time promotions got personal.