IPA report supports new Grocery code of conduct
The IPA has published a report supporting the introduction of the Grocery Code to ensure fair practice between Supermarket chains and their suppliers which was issued yesterday.
The code has been created in order to help prevent retailers from ‘exerting ever greater pricing pressure’ on brand owners.
The IPA has published a report examining how price promotions are destroying brand strength and brand loyalty and claims that, as a result, retailers are winning valuable market share at the expense of manufacturers and suppliers of fresh produce.
Hamish Pringle, director general of the IPA, explained: “As the Institute of Sales Promotion's research shows, £14.04 billion was wasted on price promotions in 2009 and a staggering 90% of their cost comes from the supply side and not the retailer. So while retailers are winning valuable market share in their war against each other, manufacturers are suffering widespread collateral damage to their brand loyalty and an erosion of brand equity. We are therefore very pleased that in our lobby for fairer play, one of the main aspects of the new Grocery Code will be to scrutinise the level of ordering products at promotional prices.”
Janet Hull, IPA Consultant and head of marketing and reputation management added that price promotions were an ‘extremely inefficient’ use of a marketing budget which would rarely tempt the consumer to trial a product, but would attract ‘promiscuous buyers.’
“We hope the new Grocery Code will help to curtail such detrimental activity, and hope that this cross-industry analysis will prepare the climate for more even-handed brand responsible negotiations,” Hull added.