Research published this week confirms what many suppliers have long suspected: they are investing too much in promotional activity and winning very little in return.
David Bridges, chief executive of Billetts Marketing Sciences, which conducted the survey in conjunction with The Grocer, said that, on average, suppliers sell 25% of their volume on promotion and many expect to do more promotions in the coming 12 months.
“But the key point is that almost half of manufacturers think they spend too much, or far too much, on promotions, compared with 9% who would like to do more,” said Bridges.
However, 89% of those quizzed thought retailers benefited most from promotions, largely because of their strong negotiating power.
Bridges added that the real concern from manufacturers
was their failure to drive profit through promotions - a view held by 65% of respondents.
The survey also revealed resistance to everyday low pricing among suppliers. Almost two-thirds dismissed the idea that EDLP was good for their category and some said it destroyed value. Others said pure EDLP did not exist: they were instead being asked to support EDLP-plus policies.
The survey’s finding were
unveiled at a seminar organised by The Grocer to explore one of the hottest topics in the industry: how suppliers can take control of their trade investment.
Promotions are a vital area, yet little quality data is available - which is why Billetts and The Grocer conducted this major research. Respondents included suppliers of branded and own label products, of all sizes, with a combined annual turnover of £14bn.
Julian Hunt