Optimize promotions to ‘change the game’

February 22, 2011

Harveys harvests a fresh image by optimizing promotions of locally grown foods with a ‘support your local farmers’ message.

Consumers keep savings and value at the top of their lists, yet supermarkets know if that’s all they deliver they won’t stand out from competitors. Their trips will be at risk each week in a circular-driven free-for-all, as households plan where they’ll buy food and beverage based largely on item-price.

Supermarkets must improve on that, urges The Lempert Report, because Walmart, Target, Walgreens, CVS, wholesale clubs, supercenters, dollar stores, small-format and extreme-value operators encroach on food and beverage trips with health, wellness, convenience and product innovation appeals that augment price.  

Retailers that collaborate with CPG suppliers to optimize promotions change the game in their favor, Michael Kantor, CEO of the Promotion Optimization Institute, told The Lempert Report:  “The game changes when trading partners justify the expense and ROI of trade events.

“Otherwise, if they don’t optimize, they fall short in the eyes of consumers. They under-estimate customer demand and suffer from stock-outs. They lose trips to nimbler specialty competitors. They miss margin goals,” he adds. Yet Kantor notes promotion optimization is growing: “Retailers and manufacturers are learning about their shifting customer preferences, how to access and interpret customer data, and share and apply that with their trading partners to invest in meaningful pricing, promotions and assortments that serve unique customer segments.” 

Harveys, the approximate 70-store southeastern affiliate of Food Lion (Delhaize America), will soon tell a retailer-CPG audience how it collaborates with specialty vendor partners across categories to optimize promotions of locally grown foods. When the retailer speaks at the Charting Your Course to Trade Promotion Optimization Summit, March 13-15 in Chicago, it will address “finding ways to be innovative and cognizant of the local/regional flavors [that] drive trips and loyalty…[and] enhance Harveys’ brand identity, mutual sales volume and community threading.”  Local is a consumer hot button today that differentiates.

The Harveys approach illustrates “sustainable advantage that [comes from] aligned capabilities, including the ability to do one-on-one meaningful offers at the local level,” adds Kantor. 

Beyond a collaborative, consumer-centric example like Harveys, Kantor cautions, “customers will find ever-increasing value in supermarkets that continuously simplify their shopping experience…. By not improving their people skills and technology enablement, they will surely lose sophisticated consumers who leverage mobile technology to find their brands.”

Supermarkets stuck on old promotion methods don’t fully engage consumers and shoppers, he contends. By contrast, promotion optimization is more productive because it builds on understanding household members’ trip planning and in-store behaviors, spending thresholds, lifestyles and purchase triggers. Trading partners then predict, plan, segment, strategize, message and execute together using these insights.

To help ensure trading partner collaboration, POI has developed an accredited program with Saint Joseph’s University that will certify retailer and manufacturer executives as Certified Collaborative Marketers.