Beruflich Dokumente
Kultur Dokumente
INCREMENTAL
GR WTH
THROUGH
PROMOTIONS
NOVEMBER 2018
CONTENTS
03 Unders tanding shor t-term uplif t s to achieve success
06 C hannel comparison
07 Categor y comparison
09 Maximising incrementalit y
14 Conclusion
15 About us
2
INTRO D U C TI O N
UNDERSTANDING SHORT-TERM
UPLIFTS TO ACHIEVE SUCCESS
The ultimate aim for any brand is However, while promotions may Success, whether for brand or
to grow, and promotions play a help grow brands to attract new retailer, can only come when
significant part in achieving this shoppers – as well as encourage promotions manage to
goal. Whether it’s by increasing their return – there is no long-term encourage additional purchasing
sales for old favourites, or helping impact on penetration. at a category level that would
establish brand new product lines, not otherwise have happened.
promotions are crucial for retailers Success comes from thoughtful We call this “incremental
and manufacturers alike. consideration of where a growth”—it’s the most effective
promotion most appropriately fits measure by which to analyse
It’s not just anecdotal, but within the entire marketing mix. promotion performance.
something borne out in hard
facts. Across the six markets Through our panels, we can see At Kantar Worldpanel, we not only
analysed for this study (Brazil, the level of promotions in each measure the level of promotion
China Mainland, France, Mexico, of our studied markets, as well by market, by sector and by
Spain and the UK), we found that as the uplift these promotions category—we also know the full
more than one dollar in every have provided. picture of how a promotion has
five spent on FMCG was through helped both the brand and the
promotions. In the UK, this rises to retailer gain incremental volume.
a third of total FMCG spend.
is spent on
promoted goods
3
PAINTIN G THE PRO M OTI O NAL L ANDSC APE
PAINTING THE
PROMOTIONAL
LANDSCAPE
Growth has become more difficult for
FMCG brands and retail—making ‘zero’
the watchword for the FMCG industry.
4
PAINTIN G THE PRO M OTI O NAL L ANDSC APE: CO UNTRY CO MPARISO N
EUROPE
Promotion value growth is flat in Europe, at +1%
in the UK, +1% in France and 0% in Spain. The UK
remains the most important country for promotions
globally, representing more than a third (34%) of
total FMCG spend.
ASIA
E-commerce is growing fast in Asian countries, driven
mostly by improving internet connectivity, which
is now more easily available and at a lower cost.
E-commerce today represents a 19.9% share of FMCG
value share in South Korea, 9.5% in China Mainland,
7.6% in Japan, 7.2% in Taiwan, 1.5% in Malaysia, and
1.2% in Vietnam and Thailand.
LATIN AMERICA
Once a channel purely for trade customers, Cash
& Carry (C&C) stores are enticing shoppers with
treasure troves of promotional offers, now selling
directly to 46 million households across Latin
America—or 44% of the population.
5
CHANNEL CO MPARISO N
CHANNEL COMPARISON
E-COMMERCE IS GROWING FAST E-commerce is the most promoted
channel—ahead of hyper- and supermarkets 36.1%
The 2018 edition of Kantar 33.9%
Worldpanel’s Winning Omnichannel % promoted value by channel
publication revealed the significant
26.1% 25.9%
changes taking place in the global
retail landscape. It pointed towards 21.1% 21.4% 21% 20.6%
a rapidly evolving landscape, with 18.3%
e-commerce (+15%), discounters 16.4%
(+5.2%) and C&C (+4.4%) topping 11.7%
11.3%
the list as the fastest-growing 8.9%
9.8%
channels globally.
34% 19.1%
CATEGORY
38.1% 20.4%
35.7%
17.1%
COMPARISON
UK CHINA
20.7% 11%
30.4%
44.6%
PROMOTED SECTORS
At a global level, our analysis
16%
suggests that the most important 14.7%
sectors for optimising spend on 15.7% 17.8%
18.6% 14.4%
promotions are health and beauty
and home care. Essential, bulk-buy
products will always shift more SPAIN
volume under promotion. 12.1% 13.3%
20.7%
14.8%
There are some interesting
differences between the most
attractive sectors for promotions 18.7% 16%
13.4%
12.5%
7
ANALYSIN G PRO M OTI O NAL SPIKE S
Extra sales
Base sales
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2016 2017
If that’s the case, how can retailers and manufacturers achieve growth alongside promotional activity?
This approach relies on three core considerations:
8
MA XIMISIN G IN CREMENTALIT Y
MAXIMISING INCREMENTALITY
For both manufacturers and retailers, Source of volume (average across laundry, colas, biscuits and shampoo)
the most important considerations % promoted value
are whether the promotion was Source: Kantar Worldpanel
incremental to the category –
meaning it brought in shoppers
consuming more volume, more 25% 18% 23% 26% 24%
31% 27%
quickly than before – and how
much of that volume was stolen
from competitors. It’s important
33% 25%
to avoid cannibalisation of a 30% 28% 31% 29%
brand’s existing portfolio.
35%
For retailers, only 18% is stolen Incremental Stolen Cannibalised Displaced Subsided
from competitors—66% can be
attributed to cannibalisation
within the store. That represents
a significant opportunity to
Expandable categories boost incrementality
maximise incremental sales.
Source: Kantar Worldpanel
EXPANDABLE CATEGORIES
HOLD THE MOST POTENTIAL
More expandable categories such
as colas or biscuits – where the more 21% 14%
20% 21%
somebody buys, the more they can 2%
consume – display higher levels of 2%
incrementality. Understanding the
potential for expansion is the best
way to achieve growth. 28%
28% 29% 35%
17%
LAUNDRY SHAMPOO
18%
BISCUITS COLAS
9
O P TIMISIN G BY CO UNTRY AND C ATEG O RY
OPTIMISING BY COUNTRY
AND CATEGORY
There’s no universal rule for promotion mechanics
% promoted volume versus % incremental sales
To improve incrementality, we need
to understand the most effective
promotional mechanic within a
country or category.
10
O P TIMISIN G BY CO UNTRY AND C ATEG O RY
UK
SPAIN
FRANCE
BRAZIL
MEXICO
11
THE LO C AL PI C TURE
UK SPAIN FRANCE
How has the promotional How important are promotions? How important are promotions?
landscape changed in the Promotions are a key element Promotions are a hot topic
past 10 years? of differentiation for retailers due to the États Généraux de
Supermarkets, led by Sainsbury’s, attempting to compete with l’Alimentation (EGA)—a new law
have reacted to the rise of Aldi and Mercadona—which has high levels encouraging sustainability in the
Lidl by reducing the number of multi- of loyalty and household reach food and agricultural sectors. Many
buys in favour of simple price cuts— despite not using promotions or anticipate BOGOF to be affected,
also nodding to consumer concerns a loyalty programme. Consum with some expecting it to disappear
around food waste. Retailers are now is one example, with its efficient completely. To mitigate this,
looking to compete with discounters promotional model well received by retailers such as Leclerc have begun
by providing cheaper prices through the Spanish public. exploring different mechanisms—
their own ranges. predominantly loyalty cards.
Who is promoting well?
Which promotions work best? Lidl’s promotional model is How has the promotional
The market may be dominated performing well. It focuses on direct landscape changed in the
by price cuts, but our research discounting, differentiating it from past 10 years?
shows that multi-buys are better the multi-buy strategies of more French retail has gone through a
for both retailer and category— established hypermarkets—and has sustained price war, with promotions
they encourage less steal between successfully attracted new buyers increasingly used as a differentiator.
brands and more incremental in-store. On average, one in three However, since 2017, households
purchasing. Meat, Fish and Poultry is promotional buyers entering a have become less interested in
an area where retailers can win with category will have done so in Lidl. promotions—in beauty, for example,
shoppers, as the rest of the plate is promotions no longer compensate
often sourced from the same store. Pizzas, coffee and olive oil are the for category decrease.
three most efficient categories. The
How do you see the promotional discounter’s country-themed weeks How do you see the promotional
landscape changing in the next are supported by media campaigns, landscape changing in the next
few years? doubling penetration during the few years?
The ‘less is more’ mentality, driven promotional period in categories We’re waiting to feel the full
largely by the success of the such as pasta. impact of the EGA, which we
discounter model, will become more may not experience until 2020.
commonplace. But there will also be How do you see the promotional In unaffected categories, such
more cross-category – possibly even landscape changing in the next as health and beauty and home
cross-industry – tie-ups to help lock in few years? care, we’re likely to see a dramatic
shopper loyalty. We’ve seen this with More FMCG players are questioning increase in promotions.
the John Lewis Partnership looking the efficiency of mass promotions,
to merge loyalty schemes across the which has devalued some categories. Regardless, the desensitisation
John Lewis & Partners and Waitrose Moreover, with the digitalisation of consumers will continue, as
& Partners brands. of the market, speed and they instead seek out organic
personalisation are fundamental. We foods and healthy recipes.
expect personalised offers through
mobile apps to become a key driver.
12
THE LO C AL PI C TURE
How has the promotional Which promotions work best? How has the promotional
landscape changed in the Promotions in Mexico work on a landscape changed in the
past 10 years? seasonal basis. Soriana operates past 10 years?
The past decade has seen “Julio Regalado” in July, while The rapid move to e-commerce
promotions make increasing use “Temporada Naranja” is run by La and digitalisation has led to a wider
of technology, with loyalty cards Comer around the same time. The variety of promotions. Even in bricks-
becoming especially important success of these seasons has led and-mortar stores, digital coupons
thanks to personalisation. What other retailers to launch similarly and QR codes are becoming
hasn’t changed is that main actions intensive activity to compete— more common than analogue
are still price-driven and run for Chedraui now runs “Festival de la mechanisms.
short periods. Too often, promotions Belleza”, during which it uses 3-for-2
are unfortunately used as an promotions in the beauty category. What impact is this having on
indiscriminate solution for struggling purchase behaviour?
products. Who is promoting well? Shoppers are becoming more
Regional retailers, such as Calimax promotion-driven because of the
What impact is this having and Casa Ley, have effective high- attraction of achieving value for
on purchase behaviour? low strategies—30% of sales at these money on premium products.
Brazilian shoppers tend to seek two retailers are through promotions. Digital platforms allow promotions
out discounts, but multibuys are Interestingly, convenience stores to be more targeted, so shopper
receiving more attention. When have a higher share of promotions experience has improved.
consumers find a good promotion, than self-service stores; promotions
they tend to spend more at the in convenience have grown in the How do you see the promotional
retailer and become more loyal, last year, while self-service stores landscape changing in the next
increasing spending index. have lost share. few years?
Promotion will become more
How do you see the landscape How do you see the landscape creative, and full-chain promotion
changing in the next few years? changing in the next few years? will become more common. For
E-commerce has had real difficulties With consumers in Mexico using instance, shoppers could see a
in growth in Brazil, due to logistical more channels to shop, promotions promotion on Weibo, and click for
barriers and cultural resistance, but will become increasingly relevant. a coupon to buy on Taobao. Then,
there is real opportunity through Online channels can offer more after a few weeks, the shopper could
promotions. We could see channels promotions than ever before, receive another coupon for the same
using promotions in conjunction with giving shoppers the power to make product on the Walmart virtual store,
apps, social media and geolocation intelligent purchasing decisions. reminding them to buy again.
to achieve cut-through. However, with “promotional
seasons” being executed by retailers
more frequently and for longer
periods of time, manufacturers
may struggle to keep prices as
low for as long.
13
CO N CLUSI O N
FIVE PRINCIPLES TO
GROW THROUGH
PROMOTIONS
Over the course of this study we’ve seen how promotions
can have significant impact for manufacturers and
retailers, across categories and throughout the world.
14
AB O UT US
ABOUT US
For more information, please contact
Stéphane Roger,
Global Shopper and Retail Director
stephane.roger@kantarworldpanel.com
+34 93 581 96 62
Contributors:
15
www.kantarworldpanel.com