Ins and Outs of Grocery Specials

A good promotional program can give your store improved price image, improved margins, and increased customer satisfaction. But how do you create a good program, and how do you determine whether your program is actually enhancing your store's image?

With increasing competition from larger stores, along with additional programs and deals available to retailers, how can buyers offer the best deals to customers and have a program that works for the store? Why do some stores have great promotions that really enhance the shopping experience, while others have specials that don't turn quickly and result in stock being returned to the back room?

The key ingredients, discussed below:

• good planning
• good choices
• using the display space wisely.

Add some demos and sampling, and your promotions will really pay off in sales and customer satisfaction.

Developing a Plan

Knowing the options for specials and negotiating extra deals to complete the presentation of the specials takes some time and planning from the buyer. It is imperative that store buyers take full advantage of special promotional programs offered by your main supplier(s). These programs offer excellent value, key items, and the great convenience of repurchasing the items throughout the month rather than taking all quantities at once. Often these items have already been selected for seasonality, sales performance, and great discounts. Much of the work has been done.

Buyers must plan a set of promotions that reduces hundreds of options down to the placement of a few dozen items. Here are key considerations:

1. Use a planning sheet which maps display locations. Identify the types of displays which work well in different areas of the store and determine the "hot spots" or most visible areas. Choosing the key items for your endcaps and largest display spaces is most important and should be the basis of your monthly planning.
2. Develop a system for keeping track of turnover orders and purchases. It is best to designate space for items as they are purchased, and it is also necessary to be able to make changes -- for unavailable items and new items you want to work in immediately.
3. Incorporate promotional planning themes from your store's calendar into the decision-making process.
4. Work as far ahead as possible, planning your displays as soon as you have information from your supplier.
5. Manage the changeovers. Don't try to change all displays and specials on the same day. If you advertise specials on a monthly basis, then the sale prices for those items must change that day. It is possible, however, to begin the special early or start it on the shelf and set up the display at the next delivery (or a few days later). Or change displays of non-advertised items on different days. It is good for all the staff to spread the work out over a few deliveries.
6. Keep it fresh. Fresh and new are still of primary importance, and keeping a fresh appearance on specials means frequently changing things. Change at least some of your endcaps twice a month. Be sure to vary the locations of the categories, or do something quite different every few months. This keeps your customers looking at your specials and noticing new products. There are promotional themes that lend themselves to special displays even while selling the usual top categories.

Making Good Choices

Once the promotional buy options have been considered, the buyer must decide what to purchase and the quantities to purchase based on popularity of the product, seasonality, and compatibility with themes or other products. The success of your specials will be affected by which products are selected, which are used in advertising, the sale price, and the quantities ordered.

Create effective groupings and determine their best location in the store. Grouping products in displays is done not only because it looks better, but because the purchase of one item suggests purchase of another. Things which go together encourage additional sales in a very significant way. (The guiding principle: would you eat them together in the same dish or the same meal?) This may mean adding a product from the monthly specials flyer to go with something on a promotional program. Or you may contact a broker for a deal on the right product to complement a special deal on your distributor's program. But the programs and especially top sellers in the top categories should always be the starting point for planning specials.

Order the right quantity for your store. Having an abundance is great, but excess is not. Another advantage of the promotional programs is being eligible for a volume price without having to order too much. You can also receive goods throughout the month, allowing you to keep displays full without huge quantities that you cannot get on the sales floor or take too long to sell.

Price right. Achieve the price point where product really sells. Typically, a discount of 25% off will triple or quadruple sales of an item. Be sure to round down below the dollar whenever possible, giving up a small amount of margin to increase the perception of a great price. (Note: A small amount of product left to sell at the regular price can offset margin you give up in this way. Intentional purchasing of sale price goods to sell at regular price after the sale is called "forward buying." In general, this should be done with only top selling nonperishable items, in quantities appropriate for your store's cash flow and storage space.)

Set up attractive and functional displays. Using basic merchandising principles, fill the bottom with larger, heavier items. Place smaller, lighter items above. Set shelves tightly all the way to the top. The top is a display opportunity, and wasting it looks as though you ran out of product or ideas. Using cut cases on the lower portion of endcaps allows you to dummy-up and also to have some cases for moving remaining product to another location. Abundance sells, so go for the fullest possible displays. If yours is not a large volume store, you can still make abundant-looking displays using dummying up techniques without buying excess inventory.

Feature a special in every category. After choosing the specials that will get your extra display space, choose something else from each category to offer plenty of specials off the shelf. This is where specialty, niche, and some new items work best. Set a goal for a number of items or sections which will have specials each month.

Have signs that work. The important elements are: the right size, bold fonts (sale price the largest font on the sign), and correct placement, which is the most visible spot -- usually under the top row of the product or at eye level or, with case stacks, hanging above or on stand up sign holders. Customers should be able to see the price easily from 10 feet away. Display sufficient quantity so that it's obvious what is on sale. And always list the regular price, so they know what they are saving.

Using Display Space Wisely

Use your store's display space to the fullest. Once you have identified all areas of your store suitable for promotional displays and which type of display works where, use your planning sheets and fill all space that will not interfere with the flow of traffic. It's also important to know which endcaps and which case stack spots are the most visible. Place the best items in those "hot spots."

When planning, keep one or two smaller spots or small display racks for the "selling through" of sale items which come off of case stacks or endcaps (especially at the first of the month.) It is important that "leftovers" (since some are inevitable) are "served gracefully," kept on the floor of the store, and not returned to backstock until there is very little. Small spaces also work very well for special categories, like seasonal candy, or summer's barbecue sauces, when you do not want to purchase a large volume of the item. Once you know what you can do in your space, you can make better choices among the hundreds of options for specials each month.

Demo and sample. Another plus for the promotional programs is that often demo billbacks are included. Although extra staffing and extra effort is involved in demos and sampling, it really is worth it. Why? Because customers love it. They try things they otherwise might not, and they get to have a positive human contact and a nibble of food, which is just what many people need after a day at work. (Yes, that's the best time!) Even passive sampling is great. Industry figures estimate you will sell 5 times as much product while it is on demo. Remember that in addition to extra sales, you are pleasing customers that much more, and that makes it worth the effort.

        Program evaluation criteria:

• The program presents an abundance of the items on sale.
• Items reflect a season, promotional theme, or are in the top categories.
• The price reflects a good savings to the consumer and meets a "price point" that is desirable.
• Store margin on the item is close to or above the usual margin for the item.
• The display is attractive, eye-catching, abundant, and has a sign that readily communicates the price.
• Displays are regularly changed, keeping a fresh selection of good values.
• Displays are dummied-up or moved to smaller spots as the sale closes.
• Inventory that is removed from the sales floor from specials displays is quickly moved out by being left on sale (with a sign) on the shelf.
• Sale extensions are easily managed, so inventory is sold to zero excess.
• Sales are significant and grow at a healthy pace, showing that shoppers look for and take advantage of the values you are offering. If not, evaluate your choices, and give space only to top-selling items. Look at your presentation and grouping of items.
• Sales data are monitored for key items which are on regular promotions, providing buyers the information to purchase more accurately each time these items are presented on sale.
• EDLP (Every Day Low Price) and EDV programs are complied with, to meet the competition.
• Something really exciting happens a few times a year -- special events which create a really festive atmosphere and bring new shoppers into the store.
• New items are offered on introductory specials and sampled.
• Samples and demos are consistently offered on specials.