COVID-19 has accelerated a trend that has seen promotional intensity decline since 2015 –a year that saw around a third of the volume of groceries in Europe being sold on deal.
At the height of the pandemic, both retailers and suppliers preferred to focus on general availability rather than the more turbulent execution of promotions.
On a more practical level, many retailers were keen to minimise off-shelf promotions, adding to clutter as they struggled to limit shopper numbers and offer a smooth shopper journey around the store.
While there remains a lot of uncertainty in grocery markets around the world, there can be no doubt that promotional activity will continue to play an important role in the strategies of retailers and branded manufacturers.
It seems certain that brands and retailers will have to consider and choose the promotions they decide to execute.
The overwhelming objective for both retailers and suppliers will be that of mutual benefit and category growth.
The two main objectives for retailers regarding promotions are to grow the category and attract shoppers from other retailers. They have little to gain from promotions that simply drag purchases forward, or switch spending from one brand to another.
From the manufacturer's perspective, shoppers switching stores might have little to no impact on them. However, they are equally keen to see shoppers increase consumption rather than stockpile.
Manufacturers should acknowledge that category growth is the only way to achieve mutual benefit with major retail customers. And, any brand that can demonstrate this mutual benefit will be set up for long-term success.
Therefore, brands must be able to demonstrate that promotions have been successful in terms of return on investment.
It will also become a powerful capability to be able to demonstrate to retail partners that there has been category growth as a result of these endeavours.
Underpinning this success will be improved forecasting, availability and compliance within promotional activities.
For more information, download Exceedra's white paper, Post-Covid Promotional Landscape, here.
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