Panorama Parma, Italy: Low Prices on Large Format

Articles
December 01, 2015

Panorama Parma, Italy: Low Prices on Large Format

Profile of a large supermarket in Parma, Emilia Romagna (ITALY) and its promotional strategies.

By Antonello Vilardi, ITALY

Origninally published at Retail Watch.

The analysis conducted on the hypermarket “PANORAMA”, located in Parma, offers thoughts on promotional strategies used to move items to higher batting cash and indirectly influence the volume of business.

Before entering into the merits of the promotion itself, we will report about the shape of the store and about the positioning of the prices charged on certain emblematic items, with high rotation, made by suppliers of known brand.

Lay out.

15 cash desks, plus 8 "fast" mode "self";

entrance with institutional promotion, expressed in the lane on the two main areas broken from the hallway, in the case respectively dedicated to the theme of Christmas Decoration (with special handout of 20 pages, entitled “Regala un Natale speciale” ("Give a Christmas special"), from November 16 to December 24) and to the one connected to toys (with special 20-page leaflet entitled “Il tuo giocattolo” ("Your toy!"), from November 5 to December 7);

on the right, after the entrance, full area of non-food (Bazar… Heavy and Light) including newsstand with newspapers, magazines and various books;

on the left, crossing in sequence until the end of the main corridor: textiles, products of great consumption (grocery, food and chemical), fresh (perishable free service, frozen), super fresh (fruit and vegetables, butcher, fishmonger, deli, bank to cut meats and cheeses);

alongside the exhibition of wines, sparkling wines and spirits, made along the perimeter wall, an area well-matched to parapharmaceutical products and gluten free.

Dining area, including ice cream shop, with "front" to the shopping arcade (beyond the barrier of cash desks) and "back" inside the hypermarket, with PANORAMA employees engaged in the operations of preparation and service.

Pricing.

Pasta BARILLA 500 grams € 0.74

COCA COLA (COKE) 1.5 liters € 1.55

FERRERO Nutella 825 grams € 5.29

FERRERO Nutella 630 grams € 4.49

FERRERO Nutella 450 grams € 3.29

Promotion.

Three business flyers…

1. “Regala un Natale speciale” ("Give a Christmas special"), with gifts baskets, food compositions and numerous articles of Christmas Decoration, valid Nov. 16 to 24, composed of 20 pages;

2. “Il tuo Giocattolo!” ("Your toy!"), effective from November 5 to December 7, composed of 20 pages;

3. “Piccoli prezzi” ("Small Prices"), valid Nov. 16 to 25, made up of 28 pages.

Step 1:

Beyond the usual articles dedicated to the decoration of parties, stands the will to want to dedicate ample visibility in detail attended to products (for the benefit of consumers who are still at home, but begin to conceive ideas on gift) that elevate the batting average cash (gift baskets and food compositions);

to stand out is also the initiative shown on the last page, which offers customizable GIFT CARDS (with the ability to customize their greetings of holidays) on minimum expenditure thresholds (€ 25, € 50, € 100), effected at PANORAMA.

This is an effective formula (if it is well perceived and goes beyond the traditional habits of consumers during the preparation for the event) in the name of loyalty which, simultaneously through personalized cards and gifts related to the free spending PANORAMA, encourage the growth of the average ticket.

Step 2:

This flyer indicates the ability to earn a discount, in the period between November 5 and December 7, redeemable from 8 to 24 December.

The discount has no fixed value, but it varies depending on the type of toy that you intend to buy between 8 and 24.

To understand each other, the "sky drone with camera" moves from a promotional price of €99.90 even to €69.90, if you use the discount coupon (difference €30), the "console 3 DS with game free" goes from €199.00 to €179.00 (difference €20), "the helicopter Radio Frequency" goes from €29.90 to €19.90 (difference €10).

Obviously the amount of the discount depends on the brand, intrinsic quality and specific monetary value of the product, which is high on average; no cases have been detected of toys with starting price of less than € 24.90, on which you can get the voucher.

Step 3:

It is the main flyer;

in grocery shopping during the period from November 16 to 20 (five days, from Monday to Friday excluding the weekend), you can get 3 discount coupons usable Nov. 21 to 25 (five days from Saturday to Wednesday, thus including the weekend).

With each of the discount vouchers, the discount allowed is 30% of a product chosen from those not in promotion.

Within the promotional catalog, some articles of the industry brand are on offer, but in a larger format than the base. 

Consequently it is granted a greater amount of product, the abutment cash obtainable is higher, would leave fewer pieces, but would gain more.

In this regard, here are two cases easily identifiable:

1. Pasta Barilla 1kg. € 1.00.

The basic version normally offered for sale on the shelves has a cost of € 0.74,

1 kilogram (made from two packages of 500 grams each), at full price, would be € 1.48,

on offer they save 48 cents,

a piece leaves the store to € 1, more easily than two pieces to € 1.48,

the retailer collects more with the part in the promotion (€ 1.00 compared to € 0.74 a piece),

the consumer saves more with better overall dimensions of space. 

2. COCA COLA (COKE) 1.5 l.x2 € 2.19.

The basic version of 1 liter and a half costs € 1.55,

2 packages (3 liters) would cost, at full price, € 3.10,

on offer they save 91 cents,

a piece comes out to € 2.19, more easily than two pieces at € 3.10, the retailer collects more with a piece in the promotion (€ 2.19 compared to € 1.55 a piece),

the consumer saves more, with better handling.

We would say, at this point, that it is natural to save because the basic formats remain at full price while the great subject of promotional offer; that the comparison should be made with objects of analysis strictly comparableis, therefore not altered by different conditions of sale;

but…

the essential fact remains that, with similar initiatives, can promote the growth of the average ticket and (further indirect effect) the turnover of the store with units sold in promotion, with lower volumes of material handled (either by the distributor that the consumer);

and that, subsequently, the disposal of any residues is facilitated by the good image that has the well-known brand of products, previously purchased in negotiating conditions advantageous.

In conclusion…

On a theoretical basis, the strategy seems effective on targets profitable (average receipt, stock rotation, sell-in/sell-out speculative);

based practice (with explicit reference to applied mechanics), the initiative includes the usual habit of increasing an undesirable volume of paper (68 pages total in flyers), which leads to understandable carelessness and counterproductive disorientation in the consumer;

communication does not definitively frees from the danger of lack of clarity about the dynamics of the release and the subsequent redemption of coupons, because the excess of synthesis does not favor the ability to understand the links and achieve simplification, but unfortunately leaves referrals to tedious consultations of various regulations.  

Shorten the prices of products of greater size can be helpful in streamlining a number of operating expenses of retailers and consumers ? A strategy to keep slim shape the commercial complexity, but by voluminous formats: it seems a paradox, is not it? Would it work?

This kind of response is always open to endless views…

PANORAMA, via S. Pellico, 20 - 43100 – PARMA (ITALY)

Indoors 4

Competitiveness 4

Communication 1

Assortment 4

Service 4

(Scale values, from 0 (lowest) to 5 (highest))