While some flyers effectively drive traffic to stores and encourage larger baskets, many others simply do not. To beat sales goals while maintaining margin, what should a grocer do?

Based on partnerships with dozens of retailers, we believe that grocers need to take the following dual-pronged approach to optimise their flyer investments:

(1) rapidly and correctly understand how past promotions performed to inform which items should be featured and promoted going forward, and

(2) use a Test & Learn approach to determine the impact of changing distribution channels, frequency, and format of flyers.

Stop simply doing what you did last year, and decide what should go on the flyers to maximise impact

Most grocers have data in disparate sources about which promotions they ran, what the promoted items were, what picture/creative copy was used, and what the resulting financial metrics were. Unfortunately, merchants and marketers simply don’t have enough time to manually cleanse, organise and analyse this data to generate actionable insights in time to refine their strategy. However, using the latest software, this data can now quickly be integrated into one place, allowing grocers to automatically compare all past promotional offers to a baseline period in which that item was not promoted to illuminate the answers to fundamental questions for each category, including:

  • Which of my promotions really drive sales? Which don’t make any difference?
  • Which offer types (e.g., BOGOF vs. X% off) work better for each category, product, and brand?
  • On which pages of the flyer does the offer work best?

Answering these questions is worth a lot of money. In fact, for today’s merchants and marketers, having these insights at their fingertips should not be a luxury, but a necessity to drive sales and maintain margin.

Determine the incremental impact of changing distribution channels, frequency, and depth

Marketers need to also understand the incremental profit impact of transitioning flyer investments from print to digital. Leading retailers have done so with a scalpel rather than a hatchet –using a Test & Learn approach, in which they transition print flyers to digital channels in a subset of markets, and compare the performance of stores in those markets to a similar group of stores in markets that continue to receive print flyers. This process enables grocers to determine what would have happened if they hadn’t made the distribution switch. Often, grocers will find that the shift to digital leads to a decrease in sales, but the transition can still be a profitable strategy if the sales loss is more than offset by the print and distribution savings.

To further improve the ROI of flyer investments, grocers should also experiment with changing how often they send flyers. By decreasing (or increasing in some high-response markets) the frequency and depth and then measuring the incremental profit impact of each change, grocers can determine the right flyer spend for each market, while reallocating marketing dollars to higher-return programmes in markets that do not respond as well to flyer investments.

Given the scale of the marketing investments that are involved, and the rapid learning that is required as the industry landscape shifts, it is even more essential than before to be able to reliably, rapidly, and repeatedly quantify the effectiveness of pulling all levers possible to optimise a flyer strategy.

 

By Rupert Naylor, Senior Vice President at APT.

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