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The End Cap is Dead: Retail Trade Promotion


How do you reach retail consumers? Multiply your paths to purchase by using technology. Map the buying model by understanding and anticipating consumer behavior at every stage: planning, purchasing, and fulfillment. Run experiments in digital stores – they give you far more opportunities to impact buying behavior.

The future of retail may be digital, but today 70% of purchase decisions are still made in the physical world.[1] Whatever their online activities, most consumers eventually stand in front of a shelf and make a choice about what to put in their shopping cart. It’s here that trade promotion has historically made its impact felt; the power of placement has long impacted shoppers’ behavior during the all-important buying decision. Those moments of choice, however, are rapidly diminishing. On average, annual store visits have decreased by 19 trips per year since 2011.[2]

With fewer opportunities to reach consumers in-store, trade promotion can no longer be the only tactic in the toolbox. But neither can it fall into disuse, since most final purchase decisions still happen in the brick-and-mortar world. How can the consumer packaged goods industry navigate this changing dynamic? Smarter, more data-driven trade promotion is the only option, but it must also be combined with a digital strategy that incorporates emerging online shopping behavior.

Proliferating Paths to Purchase

While reaching out and grabbing an item may still be the most common final step in the buying process, there are now dozens of ways to arrive at that destination. Grocery list apps, push notifications, digital coupons, and social media-based meal planning combine with multiple online purchasing options to create a unique route for each buyer. As Kelly Cole, Senior Project Manager at Blacksmith Applications puts it, “The physical store may be the final destination, but there’s been an explosion of paths that shoppers use to get there. From inspiration to planning to purchase to fulfillment, people are jumping from online to offline and back again.”

Grocery Shopping

Modern trade promotion has to take this newly fragmented buying ecosystem into account in order to be effective. It must be part of a continuous, consistent experience that moves seamlessly from inspiration to planning to purchase to fulfillment.

Based on an analysis of 93 million trade promotion events in 2015, Nielsen estimates that 59% of promotions don’t break even. As audiences scatter across more channels and take advantage of more purchase options, that number is likely to rise even higher, unless we can replace guesswork with data. Given the ever-proliferating number of options open to consumers, technology is our only hope for tackling this complex problem.

More accurate, granular and easy-to-understand data about trade spend and distribution is crucial to navigating this multi-channel world, but it’s only part of the equation. We also have to look beyond the offline world and holistically examine the buying process.

Mapping the Buying Model

Mark Baum, Senior Vice President of Industry Relations for the Food Marketing Institute, posits a “new model of the value chain, circular in nature, where the consumer is both the beginning and the end.” He believes that thanks to technological innovations “that incorporate everything from artificial intelligence to social media,” this model is already coming to fruition. To become unbreakable links in this chain, CPG companies need to understand and anticipate consumer behavior at every stage, so we can be there (whether “there” is online or off) waiting to offer the best product at the best price.

To achieve this admittedly lofty goal, it’s time to look beyond the physical world of the final purchase and into the hybridized stages of modern buying: planning, purchasing, and fulfillment.

  • Stage 1: Planning

It’s clear that most of the planning phase now takes place offline. But that doesn’t mean that lessons and tactics from older channels should be abandoned. For instance, millennial shoppers may not be sitting around clipping paper coupons, but they’re more than willing to collect and redeem them digitally by handing their phone over to the cashier during a purchase.

This kind of emergent behavior, far from being disruptive or problematic, can actually make for more effective marketing. When combined with purchase data, we can deliver relevant, timely messaging to consumers long before they enter the store, setting our trade promotion up for better performance. Randy Evins, senior principal for food, drug, and convenience at SAP, sees in the digital consumer a wealth of possibilities:

“Access to orders, customer profiles and buying habits, accurate predictive analysis, real time inventory visibility (even at the consumer’s pantry), and much more are now available in the digital world.”[3]

If we keep the customer at the center of our model, providing them with relevant, respectful offers that are meaningful in their current buying context, we can become a crucial piece of their planning process.

  •  Stage 2: Purchasing

It’s tempting to fall back on the established playbook when we get to this point in the buying model, because this has been where the role of trade promotion has typically been strongest. But technological advances and corresponding changes in consumer behavior mean that even tried-and-true trade promotions need to be reevaluated.

Small, wireless, battery-operated devices called beacons communicate with nearby mobile devices via Bluetooth have been in use since 2013, but their use has been mostly limited to non-food retail environments. Early data on their performance, however, indicates their strong potential. A 2014 study by beacon manufacturer Swirl put shopper engagement with beacon-triggered content at 60 percent. About half that number, 30 percent, redeemed beacon-triggered offers at the point of purchase.[4]

When combined with data-driven engagement during the planning phase, beacons offer CPG marketers new ways to deliver personalized discounts, rewards and recommendations to consumers during the all-important moment of choice.

  •  Stage 3: Fulfillment

Finally, retailers need to accommodate buyer preferences for collecting their purchase. Preferential parking for online customers coming to pick up their purchase in-store is just one way that retailers can prove they’re going to meet buyers where they want to be. Other emerging trends include scheduled delivery to compete new players like Amazon, online coupons based on previous purchases, and app-only specials for a local store to create an ecosystem designed to deliver convenience for the consumer and positive returns for CPG companies.

Of course, over time this mix will continue to evolve. The bottom line is that physical stores and the companies that provide their inventory must be prepared to cater to whatever combination of offline and online behavior their customers exhibit. It’s time to go from brick-and-mortar to click and mortar.

 The Digital Shelf Emerges

Decades of experience have made brands experts in traditional trade promotion tactics, but the digital shelf comes with a completely new set of challenges:

  1. There is limited “shelf” space on a screen. This is especially true as online shopping goes mobile. CPG marketers have to start communicating with consumers during planning and inspiration to compensate for this online challenge.
  2. Persistent carts increase the ease of repeated purchases. The convenience of reusing an old cart means incentives for change have to be even more enticing.
  3. End caps don’t exist. There’s no way to digitally replicate this powerful tool for inspiring impulse buys and brand switching. This makes it even more important to maximize rare moments of in-store time with targeted, data-centric promotions.

The challenges are daunting, but the good news is that running experiments in a digital store is far simpler than doing so in the real world. Product position, categorization and pre-purchase marketing can all be constantly tested and adjusted to deliver steady, incremental improvements in results. Experimental changes in traditional trade spend are far riskier and take far longer to bear fruit.

Digital shelves may not work exactly like physical ones, but they do give us far more opportunities to impact buying behavior. Tactics like paid search advertising, push notifications (whether beacon-driven or not), and retargeting can help recreate purchasing behavior once driven only by trade promotions. At the same time, more accurate trade spend data can help make existing offerings more efficient and effective.


The End Cap is Dead. Long Live the End Cap.

The world of trade promotion is evolving at a breakneck pace, but even in the face of such rapid change we don’t have to forget everything we know about consumer buying behavior or the usefulness of trade promotion. As long as we take into account changing preferences and more complex buying cycles, we can take our historical knowledge into this brave new world and expand its effectiveness by combining it with more sophisticated digital capabilities.


**This article originally appeared in Smoke Jumpers magazine issue 1. To get your free digital or print subscription, sign up here.