Welcome to the second entry of our mini-series “5 Aspects of Retail Execution That Can Hurt Your Business”. Since the Holiday Season is fast approaching, we have decided to focus our attention on promotional displays and related store compliance. Stay tuned for more articles!
One of the most popular tools product companies have on their hand are promotional campaigns, and this is reflected in an average spending equal to 19% of total revenues. When executed correctly, stores featuring promotional displays register a sales lift equal to 193%. As an example, let’s say that on any given day you sell $50 worth of your product; if you were to implement a display featuring a promotion or special sale, your revenue for that day would be equal to $96. That’s almost double what your product sells on an average day.
Getting back to the Holiday Season, according to Deloitte’s 2016 Holiday Outlook “77% of consumers intend to make a sale or promotional purchase during the holiday season, and 1 in 3 transactions will involve a coupon or promotion.” According to this estimate, it seems that the best strategy would be to launch a promotional campaign, but before you do, there is one overriding fact you should know:
Your Promotion is not going to happen.
The 2015 A.R.E. | POPAI Mass Merchant Shopper Engagement Study reported that CPGs companies believe the compliance rate is around 70%, when in reality, display compliance is only 40%. At Observa, we registered some of our customers getting results as low as 8%! For an average company, this means that 60% of the promotional budget will not be generating any revenue. That’s quite a waste of valuable resources.
What you can do to solve the problem.
- Hire a broker. Brokers are one way to ensure your displays are executed correctly at store level. However, their compliance success rate is only 47% with an additional 1% of displays executed differently from what was planned.
- Utilize store personnel. Although their compliance rate is as low at 27%, with another 12% of displays being executed in some way.
- Use your Directory Store Delivery (DSD) channel. Even worse than store personnel, DSD retail support is notoriously the least effective in ensuring a display is executed as planned. The good news for this method, however, is that they do register a high rate of success in getting displays onto the retail floor and in ensuring that some element of the POP displays make it into the store. If we look at it this way, DSDs register the highest rate of compliance at 57%.
- Choose a third party system to validate the promotional material is happening when, where and how you envisioned it.
At Observa, we understand the importance of having your promotional material and displays executed the way you planned it. This is why we found a way to make sure retail stores nationwide are treating your products and brand the way they’re supposed to. By using our system, you can now have unbiased, real-time data and know exactly what’s going on for all your promotions.
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