Optimizing Promotional Execution in Grocery Retail What is

Optimizing Promotional Execution in Grocery Retail – What is it worth? Ron Temperley, MD of 20: 20 Retail Data Insight

Optimizing Promotional execution in Grocery Retail – What is it worth? Ron Temperley, MD of 20: 20 Retail Data Insight

Agenda • • • How much does perfect execution matter? Promotional compliance – what is it and how are we doing? 6 ways promotions can leak value How data analytics can help understand the issues Options for improving execution Panel discussion Optimizing Promotional Execution

Perfect Promotional Execution Vital to the success of all stakeholders • Well run promotions can drive volume, capture share & impact shopper behaviour in the short & long term • Investment by brands is significant – the single biggest element in the customer P&L • Volume sold on promotion still huge in many categories • Yet promotional compliance remains stubbornly poor Optimizing Promotional Execution

Defining Promotional Compliance Optimizing Promotional Execution The devil is in the detail Limited measurement options in most markets – normally sample based Measuring Compliance On Entry vs. On Exit Snapshot Doesn’t show the whole picture Need: A more reliable, objective and cost-effective way to measure promotional execution

EPo. S Analytics can Provide a Solution Optimizing Promotional Execution Many retailers provide granular detail of their sales by store/SKU directly to suppliers. If we know what percentage promotional uplift to expect, we can identify stores which are below par. Running the analysis routines on each day of the promotion helps spot likely examples of the ‘off track’ root causes

6 Reasons Promotions Go Off Track Optimizing Promotional Execution Non-Participation Late Starter n Early Finisher Incomplete Execution Non-Compliant Display Inconsistent/Slow Replenishment

Retailing is Complex And the stakes are high when things go wrong ü Retailers are doing their best to maximize the impact of promotions ü Brands are investing fixed fees to run their events, paying more for prime locations and variably subsidizing the shopper offer ü Poor promotional compliance can be costly – an uplift of $1 m with a compliance rate of 70% means $400 k in lost sales ü How easy is it to get back a portion of the fixed retailer fee when execution is imperfect? üWhat are the implications forecasting accuracy & OSA? Optimizing Promotional Execution

The Next Step- Turn Insight into Action ü Share it across the organization • Sales, Category Management, Supply Chain, Marketing n ü Make it actionable • Automated Alerts, Graphs, Charts, Tracking Reports Optimizing Promotional Execution

Example 1 What does the analytical output look like and how can we use it? ü Dashboards and alerts can provide clear information to key stakeholders ü Key Account Managers, Customer Marketing and Supply Chain colleagues can all help fix common issues across a retailer’s estate

Example 2 Spot trends over time… üIs it getting better?

Example 3 Use the accumulated historic information to predict the future ü Highlight stores which always do badly ü Make sure the stock & the POS material arrives to the store in time ü Assign Field resource on day 1 to ensure the display site is full ü Make a second Field Visit after the first weekend

Example 4 Send simple alerts to the field team üWhat has gone wrong ü What it can cost ü What to do about it

Conclusion- Optimizing Promotional Execution It is a big problem, but there are solutions out there! ü Stakes are getting higher as trade promotion spend continues to increase ü Historic performance is a good indicator of future performance ü Retailer compliance is generally poor, when measured at the store/day/sku level ü Certain actions to improve execution can be taken at Head Office level ü EPo. S data can be used to improve both planning and execution ü Others can be resolved at store level by using field sales resources ü Promotional uplifts vary widely from store to store ü Promotional ROI can be improved significantly as a result ü 3 biggest ‘culprits’ – late starters, early finishers & incomplete executors

Panel Discussion