We know that retailers have to drive sales to be successful.  Weekly flyers are one vehicle they have to accomplish this.  More and more items are being sold on temporary price reduction so you need to figure out how to be there without discounting your product too much. This month we will investigate how the retailers build the ads so you can increase your chances of being where you want to be in the ad.

Retailers have four key objectives with ads
    

When the merchandising group gets together every week to create the ads, they have the following objectives:
1.    Drive traffic into the store.
2.    Deliver or exceed the sales target.
3.    Deliver or exceed the margin $ target.
4.    Reinforce the positioning of the banner or store format.

You should think of the category managers as trying to build a puzzle each week.  Overall they want to create a finished product that accomplishes these objectives, similar to the completed puzzle 
picture. Each item is a different puzzle piece and they need them all to get it done.

How they build the puzzle? Start with the edge pieces 

One strategy to build a puzzle is to start with the edge pieces. They are easy to find and they define the picture for you. Retailers start with these questions:  when will consumers have money to spend and what themes will capture interest. These questions are asked months in advance in mapping out the weeks. Consumer spending will vary considerably from week to week depending on pay cycles, government subsidies and holidays. 
    

For example, in Ottawa where a significant proportion of the population work for the federal government, it is very important for retailers to understand when the bi-weekly pays will be going to government employees. In another region with high unemployment, consumer spending is dependent on when unemployment insurance is received. Holidays also drive consumers’ purchasing behaviours. The Thursday before Easter is one of the single busiest days of the year in food retail.
    

The potential sales and the themes will be laid out in the ad planning. Some weeks where there is more money available the ad might be larger or the investment higher. These are dictated by the retailer’s own strategy and what the retailer believes the competition will do. They also change through the year as the market place evolves.  If one retailer put a very low price on a big holiday item such as turkeys or ice cream, there will be a lot of conversation about what will happen next time.
    

Items will be selected to support the overall themes and deliver the sales and margin expectations.  Usually these are on the front page and the large inside blocks. If we return to our puzzle analogy the edge is now done.

Find the unique or odd sections to build in the puzzle

The next task in building a puzzle could be to select the unique or odd sections. For building the ads these would be the items that were advertised and performed well the previous year in the same week. These products are relatively safe items to plan and they will be accepted by the group because they know what they will deliver.  
    
Odd-shaped pieces go in next

Once you finish the unique and odd sections in the puzzle, you could look for the odd-shaped pieces. They stand out and you can find where they fit relatively easily. For our category managers, these might be new items, growing items or unique products that consumers are looking for. They are top of mind and they fit right in the ad to support the four objectives. Often they might deliver a higher margin to help balance an investment on other items.
    

Most ads are now completed without having to search for too many more items.

The supplier’s role in completing the puzzle

Think of where your items fit in the puzzle. Are you an edge piece that belongs on the front page during a holiday week or are you part of a unique section to support a theme for local products? If you are one of the odd-shaped pieces you need to get on the radar so that when they are looking for one to fill a spot they pick you.
    

Help the category manager with the facts to pick your item. What sales will you do in the ad, what margin will you deliver?  If you were advertised before, how did the item perform and what could you both do differently to help improve the results?  The most important thing is to be one of the pieces selected. You need to keep your item top of mind without being too obnoxious. Reinforce the benefits of your item within the parameters of what they (not you) are trying to do.
    

Create your own strategy to be part of the puzzle. If you have other ideas for getting on the radar or if you have any questions please give me a call at (902) 489-2900 or send me an email at pchapman@
gpsbusiness.ca. 

RETAIL NEWS 

Major moves by Sobeys

Within the last month we have seen two major moves by Sobeys in the market. They announced they would be taking a significant write down on the value of the Safeway purchase and they lowered 8,500 prices in Quebec.
    

he announcement in Western Canada is significant as the company integrates all of its Western Canada operations. Either they do not believe they will generate the anticipated volume out of the market or they will have to invest more to get the volume. Regardless it will be a tough battle.  This is interesting for suppliers who have worked with them through the transition. There will be more challenges to achieve the desired results.
    

In Quebec, which is Sobeys’ strongest region, the company is moving to get closer to the price leaders in the market. The positioning is to make good eating more affordable, which is great, but the reality is the 
company is lowering retail prices to get closer to where they need to be. IGA stores are very good stores but the price gap can only get so large before the consumer will decide to spend money in other stores.
    

Both decisions will impact suppliers as they work with Sobeys in these markets.

WHAT’S IN STORE?

Welcome to the fast lane

In Atlantic Canada, Loblaw’s has been promoting a new program where they commit to having all checkouts open on Saturday and Sunday from 12-5.     As a supplier you need to understand they might be looking for assistance to pay for the investment and you can also bring this up in conversation with Loblaw Co Inc.