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FMCG Nielsen Supermarkets

FMCG suppliers lose money on 60% supermarkets deals

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By Jennifer Faull, Deputy Editor

June 18, 2015 | 3 min read

Six out of every 10 supermarkets deals will lose money for FMCG suppliers, according to a new study from Neilsen which claims to have finally put a figure on the ineffectiveness of promotions.

Supermarket

Six out of every 10 supermarkets deals will lose money for FMCG suppliers

Every year an estimated $500bn is spent on trade promotions globally, with FMCG manufacturers often investing 20 per cent of their revenue on these promotions.

In the UK, 58 per cent of these trade promotions will result in the FMCG supplier losing out.

Nielsen leader for sales effectiveness in Europe Paul Walker explained that most FMCG suppliers are aware that they will lose money on trade promotions, but until now knowing how much has largely been a matter of guesswork.

“For the first time, Nielsen has worldwide data to show how effective their promotional spend is. By looking at the retail sales of each category, we can gauge the potential for improved performance before the investment is made,” Walker said.

Nielsen analysed the performance of nearly 212 million promotion ‘events’ in 2012-2014 for five million UPCs (universal product codes), across multiple channels from seven countries - US, UK, Germany, France, Italy, Spain and Canada – with retail sales totalling more than $1.5trn.

Walker added: “Understanding what is and isn’t working is allowing us to help our manufacturer clients become more strategic, less tactical and ultimately get more from their trade investments.”

The UK analysis across nearly 200 categories suggested that the best promotional returns last year were on skin cosmetics, toilet paper and dishwasher detergent, which made money 78 per cent of the time. However, the worst promotional returns were on fresh fillings, pâtés and abrasive cleaning pads, where only six per cent of promotions made money.

The figures come as supermarkets such as Tesco, Sainsbury’s, Asda and Morrisons plough millions into lowering prices into branded goods. Most recently, Waitrose joined the discounting battle and introduced a scheme for its loyalty card users allowing them to select any 10 items from a list of nearly 1000 to be discounted by 20 per cent.

FMCG Nielsen Supermarkets

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