Supermarkets and Advertising

The Lempert Report
September 08, 2017

A match that needs to be nurtured

In one of her last columns, Kristen Cloud, web editor at The Shelby Report shared valuable lessons for grocery retailers who she suggests must set aside a budget for advertising.

Food retailers spend an average of 1.25 percent of sales (excluding pharmacy and gasoline dollars) on advertising according to the 2017 Promotional and Advertising Practices Study Among U.S. Grocery Retailers,” published by Aptaris and dunnhumby, that reports about one-quarter of retailers expanded their advertising budget vs. 2015 while 9.8 percent reduced their ad dollars. 

The advertising budget among grocery stores with printed circulars in all their stores averages 1.27 percent; those without a circular average 1.03 percent. 

According to the report 77 percent of shoppers refer to one or more advertising vehicles before or during the visit. A percentage much higher than most grocery retailers imagine. 

The report goes on to say that consumer usage is trending away from reviewing the paper circular at home, even though this remains the highest-used advertising vehicle. 

Promotions are shifting toward mobile and digital. And is driven by the Millennials, with fewer than half (46 percent) of Millennials checking the print circular at home vs. 64 percent of Boomers. Millennials are two to five times more likely to use apps, smartphone research, social media specials and other digital offers.   

Food retailers currently allocate a majority share of the budget to the print circular, at 57.6 percent.

Other findings of note include:

• 66.7 percent expect the budget allocation to the print circular to be lower in two years;

• 85.5 percent anticipate reduced allocation in five years; and

• 7.2 percent of retailers that currently have a printed circular expect to have discontinued it in two years from now; 10.4 percent expect to no longer run a circular five years from now.

And important to note that CPG vendors are willing to experiment with digital funding?. 13.7 percent of respondents reporting that most CPG vendors are willing to shift traditional trade/TPR dollars to digital/mobile marketing. An additional 47.1 percent believe that some, but not all, CPG companies are willing to do so. 

According to a study co-authored by Local Search Association and Manta, $36-70 billion in trade funds are available each year, and roughly 50 percent of those funds remain unclaimed at year’s end.