This summer, Nielsen published an alarming study on grocery trade promotions.
Although more is being spent on trade promotions, six-out-of-ten grocery trade promotions lose money for FMCG suppliers, and the situation has been getting worse. Every year an estimated $500 billion is spent on trade promotions globally and 59% of them made a net loss with FMCG manufacturers.
This highlights the importance of correct promotion execution in-store, the most efficient promotions (top 10%) making seven times the returns of the least efficient (bottom 10%).
In the UK, the proportion of trade promotions making a loss (58%) is only marginally better than the global average – but still worse than in Spain, Germany, Canada and Italy, and level with the figure in France.
In the US, the loss rate is even higher, at 71%.
This is the first time the returns on trade promotions have been quantified on such a substantial scale. The report highlights the improvement opportunities on the market.
Most FMCG players acknowledge the ineffectiveness of trade promotions, but until now, their efficacy has largely been a matter of guesswork. That’s no longer the case.
YOOBIC can provide manufacturers and retailers with an efficient tool to monitor their promotion execution in store. The automatic metrics generated allow our clients to understand where and why their promotions are ineffective and take immediate corrective actions.