How to get off the promotion train, which goes in the bad direction?

Just rarely in the almost ten years history of the conference series Retail in Detail three was found a topic so much corresponding with the actual demand for information in retail, solving the question of efficient promotions. Therefore the conference Efficient Promotions, which was held on Wednesday 31st March 2010 in Prague Congress centre U Hájků attracted more than 150 participants and culminated in a very interesting and needed discussion of retailers and suppliers.

 

As the data of GfK and Incoma presented in the opening analytical part showed, dictate of sales actions, which governed the communication at the Czech retail market, is consequently harmful to not only suppliers but also to retailers, because it irreversibly changes the shopping and consumer behaviour of people and so downgrades their relationship to product brands and shopping places. In this context Graeme Murray, consultant from Ogilvy One, pointed at the negative impacts the current economically difficult situation has on brand image. Marketing costs have been dramatically reduced and the term promo action was reduced to a simple price promotions. Almost none of the market players can remain resistant towards needs of customers who are becoming poor, but Graeme brought examples how to communicate value of savings without using the term sale / price off. A smart campaign of British company Sainsbury’s interested participants the most. This retailer, based on similar research of changing consumer habits of people found the crisis is bringing consumers back from restaurants to cooking at home. Therefore he invested five months of time to prepare a campaign “Feed your family for a fiver” which was communicating the fact that Sainsbury’s is able to offer its customers combination of products to prepare food for four-member family in cost of five pounds.

 

The conference also introduced other ideas and solutions how to work with promotions differently. For example, increasing efficiency of leaflet campaign by better targeting the distribution with usage of geomarketing, as presented by Mark Davies from TNT Post showed in the case of Harveys company, British furniture retailer, or by better focusing on relevant group of internet users as Robert Hell from Retail Info was speaking about. Petr Kohout from STI documented the first positive results, which can be gained by optimizing the arrangement of category of salty bread, including labelling the shelves, and he documented it by specific growth of sales proved in the test in German retail chain Edeka. Jiří Imrýšek, marketing director from Heineken gained the biggest success for offering a very good story of innovation and successful introduction of a brand new category of 1,5 litre pack of Zlatopramen beer in a plastic bottle.

 

The true revival to the program was brought by the presentation of Jaroslav Barvíř, director of Karlovarská Korunní. With a certain exaggeration he marked the current phase of development of the price promotions as donating consumers by suppliers. He expanded a thought of which possibilities of further development are ahead of producers. Option A = hold on till the end (or else “the fat will get slim, the slim will die”), option B = get off the train which goes in bad direction (but if only one player makes this step he will automatically loose the amount of sales and his position at the market) or some other option C? Its form was explored within the following panel discussion, professionally and wittily regulated by Zdeněk Skála from INCOMA GfK, of producers and retailers at the end of the conference. The discussion confirmed the big retail chains so far don’t feel the motivation to “get off the price train” so much as suppliers or independent retailers, including associations. Pavel Primus from Jednota SD České Budějovice admitted the promotion actions burden retailers as a necessary evil. They have to make them because customers already consider them the same obviosity as a product quality, cleanliness of the store or a good service. But especially representatives of association retailers brought many positive examples to the discussion, indicating they are trying to find an option C. also Adrian Ďurček from COOP Jednota Bratislava, who emphasized it is necessary to work on relationships of retailers and suppliers to change from pressure to draught – in the common direction – confirmed this.

 

The positive message for all market participants is “the solution is being sought”. And as someone pointedly noted, “maybe it must start just by the fact that we simply start”.