Advertising & Promotional Practices Among U.S. Supermarket Retailers
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Advertising is an essential part of doing business in the food industry. But change is happening and keeps on coming. Increasingly, customers are in control, dictating how, where and when they want communications and the demand for relevant content is key. How do food retail advertising and marketing executives make the best use of their budgets and various communication vehicles in order to be successful? We'll examine: - The advertising and promotional practices in the supermarket today with a look at expected use in the next few years. - Learn how food retail advertising and marketing executives make the best use of their budgets. - Various communications vehicles in order to be successful.
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Advertising & Promotional Practices Among U.S. Supermarket Retailers
- 1. 2015 Advertising & Promotional Practices Among U.S. Supermarket Retailers Published by: Prepared by: 210 Analytics, LLC 1
- 2. About the study Advertising is an essential, but changing part of food retailing: • Customers are increasingly in control • Consumers demand relevant content • Emerging communication vehicles • Shifting ad budgets Study examines current and future advertising and promotional practices/strategies in food retailing 2Aptaris & Topco 2015 Advertising & Promotional Practices
- 3. Methodology • 2-page survey • 21 respondents – Mix of large and small retailers – Wholesalers with retail operations • Sample reflects industry averages – Weekly sales per store: $383,044 – Average transaction size: $29.86 – Average weekly transactions/store: 12,252 – SKUs/store: 40,000 3Aptaris & Topco 2015 Advertising & Promotional Practices
- 4. Advertising Budgets Dollars Allocation Brand Mix 4Aptaris & Topco 2015 Advertising & Promotional Practices
- 5. Retailers increase ad budgets 5 Advertising budget as % of sales* 2002 2010 2015 1.2% 1.0% 1.3% * Sales excl. gasoline and pharmacy sales - 2002 and 2010: FMI Speaks 23% Admin 77% Include Exp. Exclude 1.5% Budget 1.2% Aptaris & Topco 2015 Advertising & Promotional Practices 2015 Ad budget vs. 2014 ↑ = ↓ 24% 62% 14%
- 6. Wide range of practices for co-op dollars Manufacturer’s ad paid for in whole or part by the supplier with a retailer’s name, logo and location inserted. Co-op dollars as % of total ad budget: • Ranges from 0% to 75% – 35% don’t use/secure co-op dollars • Average as % of total ad budget: 18.1% 6Aptaris & Topco 2015 Advertising & Promotional Practices
- 7. % of sales % ad budget allocation National brands 79.6% 81% National brands receive bulk of ad budget 7 Ranges from 65%-95% Private brands 20.4% 19% Aptaris & Topco 2015 Advertising & Promotional Practices
- 8. Advertising mix shifting in favor of digital 8 2015 Newspaper 42.3% Television 11.8% Direct mail & shared mail 9.3% Loyalty program 8.6% Radio 7.4% Email/website 3.8% Social media/mobile 3.1% Community donations 3.0% Billboards/outdoor signage 1.5% Other 9.2% Sources for 2002 and 2010: Food Marketing Institute, New Directions in Advertising: Marketing the Retail Store as a Brand 2002 Aptaris & Topco 2015 Advertising & Promotional Practices 2010 46.7% 6.0% 19.1% 2.0% 6.5% 2.0% 1.0% 3.0% 1.5% 12.2% 2002 60.0% 8.1% 14.1% N/A 7.4% 0.6% N/A 3.0% 1.5% 5.2%
- 9. Substantial differences among retailers 9 2015 Ad budget allocation All respondents Newspaper 42.3% Direct mail & shared mail 9.3% Radio 7.4% Television 11.8% Billboards/outdoor signage 1.5% Community donations 3.0% Loyalty program 8.6% Social media/mobile 3.1% Email/website 3.8% Other 9.2% Sources for 2002 and 2010: Food Marketing Institute, New Directions in Advertising: Marketing the Retail Store as a Brand 2002 Aptaris & Topco 2015 Advertising & Promotional Practices 100+ stores 35.1% 8.4% 6.6% 10.4% 1.3% 2.5% 18.3% 3.3% 4.7% 9.4% < 100 stores 46.9% 11.6% 8.3% 12.2% 2.0% 3.8% 0.9% 3.4% 2.4% 8.5%
- 10. Have loyalty programs 58.8% <100 stores: 38% Loyalty programs linked to higher basket size 10 $34.18 Aptaris & Topco 2015 Advertising & Promotional Practices Avg. basket overall $29.56 Avg. basket loyalty programs
- 11. Advertising Strategies The Company Brand Changing Approach Targeted Advertising 11Aptaris & Topco 2015 Advertising & Promotional Practices
- 12. Supermarket company image vs. ad strategy • In the ever-growing competitive environment, more retailers are building brand equity for stores, item promise and shopping experience • 3 recurring themes – Quality – Variety – Service …executed through advertising strategy, often in combination with value, not price. 12Aptaris & Topco 2015 Advertising & Promotional Practices
- 13. “ ”13 Exceptional fresh foods and creative solutions to inspire your family's eating National brand quality, store brand price Our stores and our store brands are viewed as "trusted neighbors and trusted brands" by our customers Value every day Quality, variety and service Enabling our customers/the communities we serve to live more generously Providing value to our customers starting with the best sales, the freshest foods and providing a positive in-store experience… Aptaris & Topco 2015 Advertising & Promotional Practices
- 14. Economy driving change in ad strategy Changing advertising and promotional strategies relative to the economy 3 recurring themes: – Adjusting the depth of promotional discounts – Increased customization – Shift in delivery strategies 14Aptaris & Topco 2015 Advertising & Promotional Practices 47%
- 15. “ ”15 We're looking at the aggressiveness of promotional price reductions to see if we can dial back some of the discounts As pricing becomes a little less sensitive, we're starting to look if adjustments can be made to promotional pricing We're testing the depth of discounts and our delivery methods (print vs. digital, as well as total footprint vs. geo-targeted) Greater emphasis on emerging and innovative categories and items, and less on value only Shifting to more digital and more personalized promotions vs. blanket, deeply discounted promotions on trip drivers Aptaris & Topco 2015 Advertising & Promotional Practices
- 16. Fewer than half grocers do targeted advertising More likely to use targeted advertising: • Larger companies • Companies with loyalty programs 16Aptaris & Topco 2015 Advertising & Promotional Practices Targeted advertising? 46% YES 64% using demographics 54% using psychographics 54% NO 64% using behavioral variables
- 17. Advertising Execution Measuring Agency vs. In-house Share of Total 17Aptaris & Topco 2015 Advertising & Promotional Practices
- 18. Majority use ad agencies; but role differs 18 In-house Agency N/A Creative planning 72% 28% 0% Ad/promotional research 68% 21% 11% Production 32% 58% 10% Media buying 22% 61% 17% Database management 57% 5% 38% Aptaris & Topco 2015 Advertising & Promotional Practices Team up with advertising agencies81%
- 19. Promotional sales results differ widely Promotional sales as % of total sales All respondents <100 stores 100+ stores < 10% 16% 25% 12% 11%-20% 32% 38% 25% 21%-30% 36% 19% 50% >30% 16% 18% 13% 19Aptaris & Topco 2015 Advertising & Promotional Practices
- 20. Majority measure promotional lift Promotional/sales lift: Measurement of advertising effectiveness tracking the difference in sales when items were promoted vs. its relative baseline when sold at regular price Some retailers also take into account: Halo effect: Promoting one item may influence the purchase of others Cannibalization: Promoted item may increase its own sales, but decrease sales of another that was not promoted Pull-forward: The effect of sales promotions on longer-term sales for items with a long shelf life (i.e. detergent) when consumers buy in larger volumes than usual — affecting sales in subsequent months 20 Track promotional lift Aptaris & Topco 2015 Advertising & Promotional Practices 72%
- 21. Sales incrementality Sales incrementality: a sale or action that resulted from a particular marketing activity that would not have realized without the promotion taking place. 21 Track sales incrementality Larger companies are much more likely to track incrementality, at 76% Aptaris & Topco 2015 Advertising & Promotional Practices 50%
- 22. Ad awareness Ad awareness: extent to which shoppers are aware of an advertised message. Ad awareness may be useful when reallocating the marketing mix. 22Aptaris & Topco 2015 Advertising & Promotional Practices Track sales ad awareness 17%
- 23. Promotional Vehicles & Types Communication Vehicles Promotion Types Used Future Predictions 23Aptaris & Topco 2015 Advertising & Promotional Practices
- 24. Number of promotional vehicles grows 24 0% 0%0% 0% 29% 35% 52% 55% 19% 10% Level now vs. 3 years ago Expected level 3 years from now The number of communication vehicles used A lot less Somewhat less About the same Somewhat more A lot more Aptaris & Topco 2015 Advertising & Promotional Practices
- 25. Types of vehicles used Current use Printed circulars 100% Shelf tags/signs 100% Email 93% Radio 93% End caps 93% Website/elec. circular 93% Digital coupons 79% Facebook 79% Sponsorships/donations 79% Direct mail 71% In-store sampling 71% 25 Current use Window signs 64% Printed coupons 64% Twitter 64% Television 57% Receipt coupons 57% Mobile coupons/ offers 57% Other off-shelf POP 50% Pinterest 36% Kiosks 21% Other social media 7% Marketing guide 7% Aptaris & Topco 2015 Advertising & Promotional Practices Average number of media/ad vehicles used per company14
- 26. Current and future use: printed materials Circular Direct mail Marketing guide 100% 71% 7% 26 0% 46% 54% 25% 50% 25% 0% 100% 0% Aptaris & Topco 2015 Advertising & Promotional Practices
- 27. Shelf tags End caps Sampling 100% 93% 71% Current and future use: in-store activities 27 8% 85% 8% 0% 92% 8% 8% 58% 33% Aptaris & Topco 2015 Advertising & Promotional Practices
- 28. Aptaris & Topco 2015 Advertising & Promotional Practices Window signs Kiosks Other off-shelf POP 64% 21% 50% Current and future use: in-store activities 28 0% 91% 9% 38% 25% 38% 0% 82% 18%
- 29. Printed Receipt Digital Mobile 64% 57% 79% 57% Future use: coupons 29 38% 54% 8% 25% 67% 8% 0% 0% 100% 0% 0% 100% Aptaris & Topco 2015 Advertising & Promotional Practices
- 30. Website Facebook Twitter Pinterest Other 93% 79% 64% 36% 7% Future use: digital and social media 30 0% 8% 92% 8% 17% 75% 10% 20% 70% 9% 36% 55% 17% 25% 58% Aptaris & Topco 2015 Advertising & Promotional Practices
- 31. Food retailers average 8 promotional types 31 Current use All retailers Temporary price reductions 100% Two for $x events 100% Buy one, get one (BOGO) 100% Advertising bill-back 93% Coupons 93% Lump sum 79% Loyalty discount 71% Mix and match 71% Market basket 64% Buy one, get one for half price 43% Expected use 3 years from now More Same Less 29% 71% 0% 14% 79% 7% 14% 86% 0% 14% 71% 14% 36% 57% 7% 18% 64% 18% 70% 30% 0% 21% 79% 0% 30% 60% 10% 17% 50% 33% Aptaris & Topco 2015 Advertising & Promotional Practices
- 32. Software use driven by larger food retailers The majority of retailers use in-house or 3rd-party software solutions to plan, execute, track and optimize advertising Most commonly used: 1. Promotional planning software 2. - Vendor portal for tracking cost changes, new items & new vendors - Sales forecasting software 3. Ad planning and execution 32Aptaris & Topco 2015 Advertising & Promotional Practices
- 33. Mix of in-house and 3rd party 33 Current use of promotional software Use in-house solution Use 3rd party solution Don’t use Don’t know Promotion planning 69% 15% 0% 15% Sales forecasting 62% 0% 15% 23% Vendor portal 62% 8% 15% 15% Ad planning and execution 58% 8% 17% 17% Deal portal 54% 0% 31% 15% Out of stock detection/prevention 54% 0% 31% 15% Product information mgmt (PIM) 54% 0% 23% 23% Data warehouse with business intelligence reporting 39% 0% 46% 15% Automated store ordering system 31% 0% 54% 15% Ad score carding 31% 0% 54% 15% Promotion optimization 31% 8% 39% 23% Customer relationship mgmt 31% 23% 31% 15% Markdown optimization 23% 0% 54% 23% Price optimization 23% 39% 23% 15% Marketing resource mgmt (MRM) 15% 15% 62% 8% Digital asset management 15% 23% 46% 15% Shopper segmentation/targeting 15% 31% 39% 15% Aptaris & Topco 2015 Advertising & Promotional Practices
- 34. Areas of Improvement Operational Areas Where Issues Arise 34Aptaris & Topco 2015 Advertising & Promotional Practices
- 35. Operational areas where issues arise Frequent issues — 6 in 10 retailers – Point-of-sales (POS) limitations – Choosing the right items to promote/advertise – Ad versioning Common issues — 3-5 in 10 retailers – Errors in the weekly circular – Quick access to historical data during planning – Coordinating promo messages across media types – Proofing and reviewing process – Out-of-stock on promotions – Timely results to enable mid-promotion adjustments – Timely reports at the right level of detail Infrequent issues — 2 in 10 retailers or fewer – Missing UPCs on promoted family of items – Wrong scan price – Proof of performance for supplier 35 <100 stores >100 stores Aptaris & Topco 2015 Advertising & Promotional Practices
- 36. Receive your free copy now! • To obtain a copy, email Josh St. Aubin – jstaubin@goaptaris.com – 813.202.8060 ext. 30 • For questions or additional information – aroerink@210analytics.com – 210.651.2719 36Aptaris & Topco 2015 Advertising & Promotional Practices
Notas do Editor
- Printed circular, direct mail and marketing guide In store: shelf tags, end caps, sampling, window signs, other off-shelf ROP, kiosks Coupons: digital coupons, printed coupons, receipt coupons, mobile coupons Digital and social media: website, twitter, facebook, pinterest, other social media