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04/01/2012

Pulse Report: Building impact through merchandising

As consumers look for ways to stay within constrained grocery budgets, they are embracing the merchandising efforts of retailers and CPG companies. In turn, companies' in-store displays, store circulars and temporary price cuts are increasingly communicating value and pulling noteworthy sales lifts.

John McIndoe,
senior vice president of marketing,
SymphonyIRI Group

About 55 percent of CPG categories saw price-only support increases in 2011, while other merchandising tactics grew at slower rates than in the previous year, SymphonyIRI reports. About 37 percent of categories saw more display-only activity during the 52 weeks ending Nov. 27, 2011, compared with 45 percent in 2010, while 49 percent of categories saw increased feature-only support in 2011, down from 57 percent in the year-ago period.

"While competing on price is important, price should not be the centerpiece of the marketing strategy. Additionally, marketers face the risk of eroding their brand equity by continually putting products on sale," explains John McIndoe, senior vice president of marketing, SymphonyIRI Group. "Marketers are really focused on promotional pricing. That's the slippery slope," continues McIndoe.

Across channels, merchandising-supported categories saw an average lift of 87 percent, SymphonyIRI reports. Categories achieving the highest lift were suited for stock-up activity and home-based food rituals. About half of consumers are cooking from scratch more today than they were before the economic downturn, and 55 percent have cut back on restaurant meals, SymphonyIRI reports.

Regardless of the category or channel, today's consumers are shopping more carefully. "Those highly relevant and targeted messages are the messages that are going to influence consumers to buy, regardless of trip mission, and even in a down economy," McIndoe says.


Supporting at-home items

As competition for share of food and beverage spending heats up, CPG marketers are increasing merchandising support of foods and beverages suitable for at-home or from-home consumption. Carbonated beverages topped the list with 75 percent of volume supported by merchandising, followed by 65 percent of sports drinks and chocolate candy, 62 percent of salty snacks and 60 percent of crackers.

Top 10 Categories by Merchandising Activity Level
Food, Drug & Mass Channels (Excl. Walmart) % Volume, Any Merchandising
Category
Point Change
vs. Prior Year
Carbonated Beverages
75%
+0.3
Chocolate Candy
65%
+1.0
Sports Drinks
65%
+2.3
Salty Snacks
62%
(1.0)
Batteries
61%
(0.7)
Crackers
60%
(0.8)
Bottled Water
59%
(1.7)
Vitamins
58%
+3.1
Frozen Pizza
56%
(1.2)
Ice Cream/Sherbet
56%
(1.2)
SOURCE: SymphonyIRI Consumer Network™; 52 weeks ending 11/27/2011 and same period prior year

TIP: Leverage modeling to evaluate the risk and reward potential of several different pricing strategies to find the optimal one.


By the channel: Drug vs. grocery

Drug stores increased their merchandising support across 87 percent of beauty categories in 2011, with price-only actions increasing in 95 percent of categories, SymphonyIRI reported. In comparison, grocery retailers boosted merchandising in 64 percent of beauty categories with price-only actions more prevalent in two-thirds of categories.


Lifting sales across channels

More than half of categories across grocery, drug and mass channels saw increased sales lift from merchandising activities during the past year. The average lift from merchandising was 87 percent in 2011, which was even with 2010, SymphonyIRI said.


Stocking up on sale items

Stock-up items were among the categories experiencing the highest merchandising lift across channels, with paper towels and toilet tissue both seeing volume increases of more than 200 percent with merchandising support. More than half of consumers stocked up on products to take advantage of sales in 2011, up 3 percentage points from the prior year, SymphonyIRI said. As consumers increasingly zeroed in on low-price items, price-only merchandising tactics saw increased lift in 71 of the top 100 categories.

Top 10 CPG Categories by Merchandising Lift
Food, Drug & Mass (Excluding Walmart) 2011
% Volume Increase w/ Any Merch. Support
% Volume
w/ Any Merch.
Change in % Inc. in Volume w/ Merch.
Paper Towels
237%
54.0%
+16.5
Toilet Tissue
217%
52.9%
+7.7
SS Seafood
200%
42.5%
+10.8
Frankfurters
169%
51.6%
(6.0)
Breakfast Meats
166%
53.8%
(13.1)
Shortening & Oil
164%
43.1%
+3.5
Cold Cereal
159%
48.7%
(5.0)
Laundry Detergent
155%
53.1%
+9.1
Spaghetti/Italian Sauce
154%
47.1%
+11.7
Chocolate Candy
150%
65.3%
(2.3)
Source: SymphonyIRI InfoScan Reviews™; 52 weeks ending 11/27/2011

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