In the last 18 months, TABS Analytics has completed promotion optimization engagements in: USA, Canada, South Africa, Egypt, Saudi Arabia, Mexico, Brazil, Chile, Colombia, Argentina, Guatemala, Australia, India and the Netherlands. The results may or (may not) surprise you...
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As we enter 2020, let’s take a look at how some key grocery retailers have performed in 2019 through their first three fiscal quarters. I want to share my thoughts on what I think has worked – and hasn’t worked – for several prominent players. Below are sales and profit results from the top 4 grocery chains in the US plus Walmart Global for comparison (60% of their sales are grocery/consumables) for 2018 and the first three quarters of 2019.
For some strange reason we are fielding lots of inbound traffic from managers seeking a better model for baseline sales. This has been a persistent issue in the industry for at least 20 years, but only now are the calls coming…odd. For those of you not familiar with the concept for the CPG industry, a sales baseline is an estimate of sales in the absence of retailer price promotion. You can learn more about the concept in this sales baselines blog post and trade promotion optimization white paper.
Just know that without an accurate baseline, trade promotion optimization analysis will be inaccurate, and more importantly many of the decisions made from the analysis will be wrong. Some in the industry will say there are many ways to calculate a baseline (true), and given that, there is no way to tell which model or estimates are the best (false). There actually is a method for measuring which baseline estimates are the most accurate, and if you are interested in the technical details you can find them in this academic paper.
Few forces have shaped the consumer packaged goods (CPG) industry over the past 20 years like category management. Originally, the domain of large firms with massive budgets, several improvements in information technology and the emergence of sophisticated, less expensive outsourcing options have largely erased the huge advantage these firms once enjoyed. Just about every company over $50 million nowadays has some kind of category management infrastructure and the largest manufacturers continue to increase their investment with headcount, software, data and hardware at retailer locations (on-sites).
But, as we argued in our recent webinar, the process of presenting category management findings in fact-based selling presentations to retailers more often than not remains mired in arcane procedures and complexities that churn out the wrong conclusions. There's a better way to deliver fact-based presentations to the retail trade: using the FORCE process.
