Those of you that have worked with me in this industry will know that I am passionate about convenience stores – to the extreme in many instances! And the one thing above all that absolutely gets me – is the way in which so called promotions – are applied at store level within this industry.
I have no clue why they bother even having these promotions. It must drive the retailer/franchisee nuts on a monthly basis! Here are some priceless ones that I picked up today.
Buy either a packet of Tennis or Eet Sum Mor biscuits for R9.95. Now I ask you with tears in my eyes – does that sound like a bargain to you? Are you going to drive your car to this store to buy either of these products? I would hazard a guess that any biscuits sold in our stores equates to less than .05% of our sales. So why promote it, knowing that I as a customer can buy it cheaper at my local supermarket?
How does that build feet into my store? It is not a product that my customers are looking for?
Here is another one: Buy two Milo drinks for R9.95. Does that sound good value to you? Again I bet you could buy them off the shelf for cheaper at the local supermarket.
There are other applications for so called promotions – like buy 2 of this product and enter into a draw to win tickets to a confederation soccer game or even better win a diamond! Do you know anybody who actually won one of these diamonds? It was smaller than the head of a sewing pin! I am still waiting to hear how they suggest I set this diamond?
And I bet you the small print around winning a trip to a soccer game will exclude flights! So if I win a ticket or two in a region that I do not live in – even if it advertises a ticket to the final – will mean that I actually cannot use it anyway!
So why do the oil companies in particular persist with these non-sensical “non value add” promotions? Well here are some of my guesses as to why they just do not get “it’ when it comes to promotions.
1. The supplier is paying a “kick back” to the oil company for the privilege of getting their product onto the best shelf space in the stores, advertising on glossy pamphlets – and free advertising on the oil company website to boot! How does it add value to the oil company- well it doesn’t quite frankly. I wonder how many retailers or franchisees actually know their breakeven point on a given product on promotion? Does the oil company care about the success of each product on a promotion? I wonder how many of the buyers are made to calculate the success rate of each product on promotion?
2. The buyer has a KPI (key performance indicator) which says – thou shalt deliver 5 product promotions per month. So quantity and not quality are the key to his success or failure in his position. I doubt he gets measured on increased number of feet in the store, increased margin for the retailer et al. Why do we need to have so many products on promotion at any given time?
3. This industry remains subservient to the supermarket industry. Now what do I mean by that? And here I blame the suppliers as well as the buyers within this industry. In the supermarket world, I as a supplier pay for the privilege of getting exclusive rights to a gondola end for a particular period of time. So in turn this same type of principle has been applied to this industry except that the mechanics and purchasing habits are distinctly different. And yes I know we as customers buy in the same way no matter where we are shopping BUT I stop at a convenience store for a very different shopping experience to that of a supermarket shopping trip. My planned purchase is different to the one I have when stopping at a supermarket – and we know for a fact that price is not the priority when considering where to stop at! I want to see this industry “grow up” to take its own identity separate to that of the supermarket market. And here the suppliers also have to rethink their strategies on how to work this market to their benefit going forward.
Suppliers and retailers need to step back and re-evaluate their reasons for running national promotions. What is the primary purpose that drives our selection for a good promotion? Please do not tell me that in this industry that “Price” is a driver. The first example I listed is based on price – the second one is based on value add.
Well to the average customer R9.95 for a packet of ordinary biscuits sounds about the normal price – in other words I do not perceive any price saving. As regards the tickets for a soccer game – and I might be wrong about the small print here – (but that is based on the pathetic diamond campaign a few months back) – so I win a ticket to the final and I live in Cape Town – how on earth am I going to get there?
Does that add real value to me?