There are many industry terms people ask about. This year we are taking a different term each week to define and share some applications.
In store specials are temporary price reductions that are not usually advertised. The discount is supported with signage at the point of purchase to entice consumers to buy the item or buy more units of the item.
Most in store specials for national brands are supported by discounts funded by suppliers. In store specials for private label are funded from retailer’s margin. These offers on branded and private label products are for a set period of time.
Retailers put their own twist on in store specials
Food retailers are all trying to sell products and they have their own way of doing it. In store specials are no different.
Walmart call them Rollbacks
Sobeys calls it a Save Cycle
Loblaw call them In Stores
Each retailer has their own schedule and period of time for these temporary price reductions. Ask your contacts in merchandising for the lead time and scheduling process. Usually, they need to be approved and they also have to buy inventory.
There will be times when these items are not approved. Usually this means there is something happening with one of your competitors or private label.
In the past, retailers would fund part of the value of in store specials. This practice is almost non-existent now. Suppliers now have to fund almost all of the discount.
Retailers have their reasons for in store specials
The first and most important reason retailers have in store special programs is to drive price image. These items have signs on the shelf and for over and above displays to indicate the savings. Consumers like to believe they are saving some money or getting a bit of a deal.
Some retailers have the ability to calculate the consumer’s savings on the receipt. When people look at the bottom line and see they ‘saved’ $xx.xx it reinforces the savings they saw at the shelf.
In store specials are usually for at least 3 weeks and can be up to 6 or 8 weeks. Retailers like to leave these temporary price reductions in place to reduce labour costs associated with changing prices and to get credit for the savings.
Retailers like to leave in store specials on for a period of time to ensure they manage inventory. They can predict the sales better over a minimum of weeks as opposed to trying to forecast 1 or 2 weeks.
The average conventional store has +/- 35,000 SKUS and retailers target about 10% of items on in store special at one time. You might hear them refer to the ‘rotation’ which is the schedule of in stores. When there are 1/10 items with these signs it gives a good impression of savings throughout the aisles.
In store specials are more prevalent in grocery as opposed to the perishable departments. You do see them on packaged meats, but retailers usually try to drive the price image on branded grocery items.
Considerations for suppliers
I was going to write ‘benefits for suppliers but I figured I might get some comments! I decided to go with considerations…
Trade spend is a requirement for most suppliers and in store specials can be an integral part of your promotion plan.
The best benefit for suppliers is the signage at the point of purchase. Many consumers do make the decision to buy at the shelf. You certainly have more chances to get their attention. There is an old saying in retail, ‘signage sells’ and it is true.
One consideration is what you did last year. If you had some form of temporary price reduction for a period last year you might have to explore in store specials to deliver the same volume.
In store specials are one option to combat competitive activity in your category. If the other items in your category are constantly investing to generate sales in store specials can get your product noticed at the shelf and deliver sales.
If you are investing with in store specials, make sure you get into the stores to ensure the labels are up and you are getting credit at the shelf. Retailers have purchased your item at a reduced price, so you need to check to make sure signage is in place.
When you fund in store specials, you discount all of your products being purchased by the retailer. If you participate in a loyalty program, you only pay for the points that go through the front end to customers with the loyalty card.
In store specials can be a good option for smaller suppliers. You do not have to have regional or national listings to participate in these programs. The discount expected is less than ads and the volume is not as volatile as advertised items.
If you have any questions about building a promotion plan with your customers, you can always send me an email peter@skufood.com or call me at (902) 489-2900.
Peter
Supermarket merger
In Canada we have seen a lot of consolidation in the grocery industry. The U.S. market has always been more fragmented. In the news we see Kroger has announced they will purchase Albertsons. These are two giants in the industry coming together.
The deal is so big, they say it will not be done until 2024.
It was interesting to note in the article the market share of the new business would be +/- 13.5% which is very close to Walmart’s #1 position of 15.5%. We will watch this as it unfolds because there will be a lot of implications for suppliers with these two companies coming together.
Packaging claims
We see claims on many products. It is unfortunate when brands try to gain an advantage. It dilutes the power of legitimate claims. Food science is a complicated issue and there are different perspectives.
For small to medium brands it is important to differentiate from a claim that doesn’t have real meaning for consumers.
Where is Peter Speaking?
Learnsphere Supply chain 123 Nov 1st
Alberta/Manitoba Consumers & Customers – Satisfying Both
Learnsphere Supply chain 123 Nov 2nd
Alberta Consumers & Customers – Satisfying Both
N.S. Minister’s conference Nov 3rd
Halifax - Panel-Variables in value adding
Food and Beverage Atlantic Nov 10th
Business building masterclass
Learnsphere Supply chain 123 Nov 15th
Alberta/Manitoba Trade marketing
Learnsphere Supply chain 123 Nov 16th
Alberta Trade marketing
Food and Beverage Atlantic Nov 17th
Business building masterclass
Food Island Partnership Nov 18th
Go to market strategy
Foodpreneur Ontario Nov 22nd
Getting your products on the shelf
Food and Beverage Atlantic conference Nov 24th
Moncton Panel: Leveraging national awards and recognition
Food and Beverage Atlantic Nov 25th
Business building masterclass
Learnsphere Supply chain 123 Nov. 29th
Alberta/Manitoba Getting off the Shelf: Consumer Marketing
Learnsphere Supply chain 123 Nov 30th
Alberta Getting off the Shelf: Consumer Marketing
Food and Beverage Atlantic Dec 1st
Business building masterclass
Food and Beverage Atlantic Dec 8th
Business building masterclass
Alberta Agriculture Jan 26th
Getting Alberta products on the shelf
Alberta Agriculture Feb 9th
Getting Alberta products in the shopping cart
