Independent grocers can gain an edge in trade promotion game
Through a special arrangement, presented here for discussion is a summary of a current article from the Aptaris blog website.
When it comes to capturing their fair share of impact from trade deals, independent grocers have long struggled to match their crosstown, big-chain rivals. Scale is a key challenge. The effort and resources required to identify, negotiate, accept, implement and publish a single promotion are the same, whether the execution is for 12 stores or 1,200.
Big chains may spread these tasks across more hands, but they also suffer from promotional practice logjams and disconnects that may tend to neutralize their advantage, due to versioning complexity, duplication of effort, review and rework.
The opportunity is open for smaller retailers — who are inherently more consolidated, nimble and fleet of foot — to gain an edge in the promotions game. It comes down to defining and enabling promotion practices that permit streamlining and collaboration across the enterprise. Independents should explore three areas of present opportunity:
Streamline and connect your processes. Neutralize the scale advantage by making promotion decisions faster and adopting disciplined executional processes that offset the differential effort. Use automation to reduce and simplify steps and ensure that correct information is in play across functional areas of your business. Harmony is enabled when you successfully align the creative process with the business decisions.
Collaborate within your enterprise. Structure your ad process for collaboration and design connectivity throughout the lifecycle of each promotion, from planning, to execution, to measurement. Establish a consistent workflow with roles defined, assigned and tracked.
Collaborate with your vendors. Establish a portal-based system that transfers responsibility to vendors to enter complete information about each offered deal and makes it better for them to do so. Online accuracy will make faxes, e-mails and paper forms a thing of the past. Negotiations and decisions will commence faster while minimizing the need for reviews, changes and reconciliations.
These trade promotion management capabilities are enabled by software solutions but rooted in best practice. They are quite readily available now, and adopting them can be far less disruptive than you might think, especially where web-based technology is available.
The right promotional tools and processes can enable independents to exploit their natural advantages to win with shoppers and capture a fair share of deal profits.
Discussion Questions
Do you see any advantages for independent grocers when it comes to securing trade deals? What suggestions would you add to those mentioned in the article?
These strike me as pretty generic, in that anyone could benefit from adopting these, small or large, chain or independent. The advantage a smaller retailer has is the ability to take promotions that make sense for the customers and perhaps customize the deal in a way that will be more appealing to the shoppers (and more profitable to the retailer). I would look to speed to promote as a possible advantage. Assuming the independent is also advertising, run the deal on national brands as soon as you can – try to beat out the larger retailers. Looking forward to Tony Orlando’s comments as our resident “small retailer.”
Improvement by independent grocers in securing trade deals adds an advantage to their competitive situation, whether by streamlining processes or collaboration. But their biggest boost will come not so much via trade deals as in tailoring a boutique-type uniqueness in their stores and operations to current day wants and needs of their customers and potential customers.
Thanks for throwing me another fat pitch right down the middle, James. Let me simplify this, as to how an independent can gain an edge on the big chains.
First off as I said in the past, this involves building relationships with excellent regional vendors, who offer a variety of products, reaching all the departments of your store. It is key to make sure your credit line is established, and all bills are paid on time.
If those two things can be met, than the process for working deals is up to the store owner or manager who really knows how to work a deal, which is the key for me. That is a skill which requires an understanding of your customers’ needs for something that will move at a great price, so be careful who you appoint to this task, as 100 cases of generic hot dogs is not your answer.
The printing or advertising media company you work with must be able to turn a deal around quickly to get in into your promotion that week, which is a huge advantage for an independent. Today, I am working deals for my special Thursday ad, that will be sent down to the printer by 5pm, and will hit the streets in 3 days. This is a huge winner for me, as hot deals come off the wire (e-mail) from companies looking to move out product all the time.
I understand also that certain national vendors will not work with us, so I don’t waste my time anymore worrying about a hot deal from them, as there are plenty other vendors who will treat you well.
This process is a never ending search for the best deals, and it takes time, experience, and pulling the trigger at the right time to make a hit in your ads.
Independents can win in some areas by fighting the fight in their arena, and using their marketing skills to procure the right product, at the right price. Good luck to all who do this every day.
Tony’s recommendations are great! While he makes it sound easy, I am sure that executing the tactics mentioned takes a concerted effort by a knowledgeable and skilled team.
Sounds like Tony has it figured out and I want to thank him for translating the article so I could understand it. Can’t really ad much to what Tony says.
Recently I was visiting a retailer who had charcoal on sale. However, he saw that Home Depot also had it in their ad, significantly cheaper. He got on the phone and called the wholesaler, screamed and swore at them to get him an allowance so he could lower the price. The wholesaler called the manufacturer and repeated the process. Within 20 minutes the problem was resolved and the price was lowered in the independent’s store.
Another area where independents can excel is in execution. Oftentimes the bigger chains have so much going on that execution can get staggered. On time and executed where agreed can help the independents in negotiations.
Like the others here, I have to defer to Tony and his experienced view. Then, I have to echo his call to “play to your strengths” and work with those who are willing to collaborate and engage (and stop worrying about those who can’t, don’t or won’t).
I would like to believe that the independents can also use as an advantage their “local market knowledge” and shopper insights of their shopper (sometimes by name!) to upsell, suggest, tailor cross promotions, etc. that are far more meaningful than those done by a HQ based person 2 time zones away. It may be wishful thinking – but I want to believe the opportunity exists.
At one time as a consultant I made a living by designing and implementing programs to help second-tier and third-tier supermarkets get more than their fair share of vendor dollars. We met with manufacturers with the following proposal regarding special (i.e., extra) promotional funds that usually went to market leaders: We reminded the vendors that the market leaders’ uses of these supplementary dollars generally resulted in only about 50% of the money being passed along to consumers in promotional programs. They kept the remaining 50% for their “promotional costs.”
My clients promised programs that would pass 80-90% of the extra funds along to shoppers in the form of discounts. For the manufacturers, this was a major win because more of their investment went directly to moving products off the shelf and into the pantries of consumers.
Thanks to all the learned commentators who weighed in on this post. Many of your points deserve further emphasis.
Yes, both chains and independents stand to benefit from more orderly, connected, and collaborative practices around securing and managing trade deals.
Yes, speedy follow-through and persistent follow-up are key factors in the equation.
Yes, in-store execution cannot be over-emphasized.
And yes, local market knowledge can be an important edge for the independent operator.
None of this easy. Technology can help and it is getting more feature-rich and affordable. But sound practices matter when it comes to getting the most out of trade promotions.