Each year him! speaks to over 3,500 independent caterers while they are shopping at cash and carries throughout the UK to understand what they are buying and why.
We also gain an insight into the effectiveness of promotions in the cash and carry, which shows that keen prices and promotions cannot make up for weaknesses in standards, service, range and convenience of visit.
As value for money becomes even more important to catering customers during the current climate (value for money being price versus experience/perception of service, quality of product), price and promotions are obviously key aspects of retailing, but promotions are way down the list of priorities for independent caterers when shopping at the cash and carry. They are rated as sixth in importance after value for money, cheap prices and fast and friendly service. Only a quarter of caterers say that promotions are important to them when shopping at the cash and carry.
Promotions do play an important role in the perception of value, however, and therefore a careful balance of promotions should be maintained, keeping in mind that often less is more so that customers can see the wood through the trees.
Caterers do not rate the quality of promotions in the cash and carry as highly as retailers, scoring 7.3 out of 10 from caterers compared with 7.6 out of 10 from retailers. This suggests that the quality of promotions may not be as good for caterers as it is retailers. Are the promotions hitting the right audience?
Only 15% of caterers said that they are planning on buying an item on promotion here today, that is considerably less than independent retailers (29%). Of those caterers who are planning on buying an item on promotion 29% tell him! that they knew about the item being on promotion because they received a leaflet, 22% said that there is usually a promotion on that item and 21% said that they remembered the item being on promotion last time they were in the cash and carry.
The majority of caterers said that would prefer a direct price reduction, although 14% said that they would prefer a multi buy, 13% would like another product free. However 67% of caterers said that they were going to buy the item which they brought on promotion anyway, so are we just giving margin away unnecessarily?
On average caterers are buying just one item on promotion per visit and this is mainly soft drinks and alcohol. But promotions do encourage caterers to buy something on impulse. One third say that they brought a product which was not on their shopping list because it was on promotion.
Remember the majority (85%) of caterers are not planning on buying a promotion so this highlights the importance of point of sale in store to influence the customer. Thirty per cent of caterers say that they did notice POS within the cash and carry here today and that led nearly half to go on and buy the featured product, suggesting that it is the treatment of POS around an item which can really drive caterers to buy it.
Promotions may not be so important to caterers due to them offering few promotions in their own outlets. Only one third do any form of promotion (23% offer a set menu, 18% offer a meal deal, 10% offer a 2 for 1, 8% temporary price reduction). Interestingly 5% of caterers do admit that promotions do influence what they put on their menus.
All this suggests promotions are “worth it”, but wholesalers and suppliers should use customer insight to develop promotional strategies, rather than “it’s worked before so it must work again” theories.
Also question whether it did really work. Often promotion sales uplifts are due to the treatment the product receives (multiple facings, gondola ends, POS) rather than the fact it is a promotion.
Promotions are time consuming and costly to implement, but do help the overall perception of value for money in the depot so “a less is more” approach should be adopted and standards maintained. Wholesalers should spend more time and effort ensuring standards are kept high to draw in customers rather than resorting to lots of promotions.