More Promos Mean More Sales
Study contends that CPG retailers should pay more attention to basics and more customers, less to millennials and online sales.
By Pan Demetrakakes
Promotions and low-cost strategies are the key to selling food and other consumables, according to a new study by TABS Group.
Other conclusions: CPG retailers as a whole are too concerned with digital sales, which actually declined last year; they pay too much attention to millennials; and too little to older core consumers.
The Consumer Value Study of 1,000 American adults looked at buying patterns for 15 key foods and beverages: carbonated beverages, salty snacks, cereal, yogurt, water, ice cream, cookies, fruit juice, refrigerated juices, crackers, frozen pizza, frozen novelties, candy, popcorn and isotonic drinks. Respondents were asked where they shop for food and which of 10 price reduction strategies they most often used.
Price reduction strategies were broadly divided into five “active” ones, which require actions like clipping coupons, and five “passive” ones, like simply shopping at a store that practices everyday low pricing. It found, paradoxically, that while participation in all ten strategies declined from last year, shoppers actually increased their searches for deals across multiple retailers.
The most important conclusion: Sales in the 15 studied categories are declining, and the reason is low-quality trade promotion efforts.
“The more deals that are out there, that they’re using, the more they buy,” said Kurt Jetta, CEO of TABS Group. “It just stimulates more purchasing.”
One of the biggest surprises in the study, Jetta said, was that among female millennials (age 18 to 24), purchases in the 15 categories actually declined 14 percent last year, while male millennials bought 6 percent more. Jetta explained that this is probably due to young women living at home longer. That means the primary grocery shopper is likely to be Mom, and Daughter is more likely to spend her money on electronics and other non-consumable goods than food.
That leads to one of the study’s other conclusions: The CPG retail industry, and often the trade press that covers it, are excessively preoccupied with millennials.
“There’s just this ridiculously overblown focus on this group, and for certain industries outside of CPG it’s probably valid,” Jetta says. “For certain categories within CPGs like cosmetics it’s valid. But most companies are mass market companies; they’re trying to appeal to the heaviest buyers typically. And that is, as it has been, women 35 to 54—the ones that are mothers in large households.”
By the same token, there has been, in Jetta’s opinion, too much attention paid to online sales. These constituted only 1.3 percent of total sales in the 15 categories, down slightly from last year.
“Hardly anybody buys online in these categories...and nobody talks about the bread and butter that drives these categories,” Jetta says.
The Consumer Value Study was conducted by TABS Group in conjunction with the Promotion Optimization Institute, an organization that champions collaborative promotion optimization with the focus on the customer/shopper through sales, marketing, and merchandising strategies.
Other conclusions: CPG retailers as a whole are too concerned with digital sales, which actually declined last year; they pay too much attention to millennials; and too little to older core consumers.
The Consumer Value Study of 1,000 American adults looked at buying patterns for 15 key foods and beverages: carbonated beverages, salty snacks, cereal, yogurt, water, ice cream, cookies, fruit juice, refrigerated juices, crackers, frozen pizza, frozen novelties, candy, popcorn and isotonic drinks. Respondents were asked where they shop for food and which of 10 price reduction strategies they most often used.
Price reduction strategies were broadly divided into five “active” ones, which require actions like clipping coupons, and five “passive” ones, like simply shopping at a store that practices everyday low pricing. It found, paradoxically, that while participation in all ten strategies declined from last year, shoppers actually increased their searches for deals across multiple retailers.
The most important conclusion: Sales in the 15 studied categories are declining, and the reason is low-quality trade promotion efforts.
“The more deals that are out there, that they’re using, the more they buy,” said Kurt Jetta, CEO of TABS Group. “It just stimulates more purchasing.”
One of the biggest surprises in the study, Jetta said, was that among female millennials (age 18 to 24), purchases in the 15 categories actually declined 14 percent last year, while male millennials bought 6 percent more. Jetta explained that this is probably due to young women living at home longer. That means the primary grocery shopper is likely to be Mom, and Daughter is more likely to spend her money on electronics and other non-consumable goods than food.
That leads to one of the study’s other conclusions: The CPG retail industry, and often the trade press that covers it, are excessively preoccupied with millennials.
“There’s just this ridiculously overblown focus on this group, and for certain industries outside of CPG it’s probably valid,” Jetta says. “For certain categories within CPGs like cosmetics it’s valid. But most companies are mass market companies; they’re trying to appeal to the heaviest buyers typically. And that is, as it has been, women 35 to 54—the ones that are mothers in large households.”
By the same token, there has been, in Jetta’s opinion, too much attention paid to online sales. These constituted only 1.3 percent of total sales in the 15 categories, down slightly from last year.
“Hardly anybody buys online in these categories...and nobody talks about the bread and butter that drives these categories,” Jetta says.
The Consumer Value Study was conducted by TABS Group in conjunction with the Promotion Optimization Institute, an organization that champions collaborative promotion optimization with the focus on the customer/shopper through sales, marketing, and merchandising strategies.
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