Confectionery items are most promoted

The latest Europe wide analysis into the pricing and promotion of fast-moving consumer goods (FMCG) by market and shopper intelligence firm IRI highlights the failure of promotions to boost sales volumes.

Confectionery was the most promoted category in Europe – up by 5.3% to 31% of all products sold on deal – as suppliers and stores tried to convince shoppers to indulge themselves.

However, it seems that food and non-food promotions are not always boosting or sustaining volumes in the way that they used to.

Tim Eales, strategic insight director at IRI, suggests that promotions have reached a tipping point. He says: “The UK, which has traditionally had the highest level of trade promotions in Europe, is showing signs of a decline in promotional intensity. FMCG manufacturers may be losing patience with expensive trade promotions that are not bringing the volume rewards they used to.

“Promotions have helped shoppers meet the rising cost of their grocery shopping baskets, but they eventually become used to them. After a while their loyalty towards brands and stores erodes which makes it difficult to raise prices in the future.  As manufacturers try to regain some of the margin that has been gradually eroded since the economic downturn began, they need to think differently about how they use promotions to identify new paths for growth. Clearer definition of goals and priorities that are developed with retailers and consider the multi-channel landscape are essential.  The UK is just the tip of the iceberg.”

“With high price inflation expected for the remainder of 2013 and beyond, retailers and manufacturers must step aside from the margins battle and work together to define merchandising strategies using specific tactics such as occasions for special treats to drive impulse purchasing on non-essential items. Powerful predictive analytics solutions will help pinpoint the best scenarios for lower investment and better ROI,” concluded Eales.

The IRI report “Price and promotion in Europe: FMCG industry at a tipping point” provides FMCG marketers and retailers with  valuable insight across countries enabling them to benchmark market trends and plan future paths to grow that use price and promotion effectively.  The longest economic downturn for a generation and the change in shopping habits that followed provides an opportunity to revisit pricing and promotional strategies in mature markets that can then be deployed in the emerging markets.

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