Store Brands

FEB 2017

Store Brands delivers unprecedented strategic and tactical information needed by retail executives to develop and support compelling, differentiated store brand programs to build customer loyalty.

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Promotional Insights 8 Store Brands / February 2017 / I nnovation and change defined 2016 for much of the retail industry, as consumer demand and behavior shifted. How were these effects felt within the grocery channel? Did changing shopper behavior and expectations impact how grocery retailers market to consumers? Market Track reviewed print ad activity over the past 12 months to understand how grocery retailers adjusted not only their circular advertising strategies, but also their approach to promoting their private brands. Digital's influence over the purchase process has inarguably grown, regardless of whether a consumer is buying a new TV or making a trip to the grocery store. That said, grocery retailers have the challenge of striking a balance between delighting grocery shoppers who have followed the same process for years and those who have taken to the new digital world. For example, 2016 survey data from Market Track revealed that 47 percent of shoppers use print circulars to find deals on groceries — more than any other promotional media available to them. Compara- tively, only 12 percent claimed to use grocery retail- ers' websites most, while 6 percent turn to email for in-store promotions and a meager 3 percent leverage smartphone apps more than other channels. These results were more or less in line with findings from the same survey conducted in 2015, when 49 percent responded that they use print circulars more than any other media to find grocery deals. These insights alone demonstrate that grocery retailers cannot abandon their tra- ditional methods of promotion. From 2015 to 2016, there was no significant change to print promotional volume in the grocery channel. The total number of print circulars run by grocery stores decreased by 2.2 per- cent in 2016, yet total pages increased by 3.1 percent, according to Market Track. A second shift in consumer behavior was more the norm than a trend in 2016. The demand for healthful and environmentally sustainable ingredients continues to soar, and the effects of this movement have been uniquely felt by the grocery channel. Private label products were naturally at risk with the healthful-eating craze. Traditionally providing a lower-priced alternative to national brands, retailers needed to resolve the problem posed by the demand for better ingredients, while remaining the value option on the shelf. Many retailers addressed this issue by creating private label tiers, merchandising products both on top shelf alongside higher-priced gourmet options and on the bottom shelf amidst the more price- sensitive options. Based on 2016 survey data from Market Track, grocery retailers were able to successfully quell concerns about the quality of private brands. Of the survey respondents, 81 percent said they purchased private label products in 2016, while 70 percent said they believe private label products contain the same ingredients as national brands. Price also remains a consideration for shoppers when it comes to private label, with 48 percent saying they would consider buying private brand products more frequently based on price. A review of promotion- al data shows that grocery retailers maintained similar levels of promotional support for their store brands in 2016. The average U.S. grocery store allocated 15.7 percent of its print circular ads to private label products in 2016, down slightly from 15.9 percent in 2015. Grocery stores are not immune to the effects of the changing consumer landscape. Every dollar transacted in their physical store locations will be increasingly in- fluenced by digital interactions. And grocery shoppers are likely to grow more discerning of product quality and ingredients when filling their baskets. Refining advertising and promotional strategies will be instru- mental in keeping pace with consumers. That said, your average grocery shoppers are still referencing the circular more than their email inbox or social media when searching for weekly promotions, and they are still heavily influenced by price. Until these behaviors shift for good, both the print circular and private label will continue to be centerpieces of promotional strategy for grocery stores. SB Ryne Misso is the director of marketing for Market Track, a global provider of advertising and promotional tracking, brand protection and ecommerce pricing solutions. He can be reached at [email protected] Print circulars still powerful for promoting private brands By Ryne Misso

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