Enterprise Marketing & Promotions Management

Improved Economy Impacts Supermarket Advertising Strategies

By / December 2015

Insights

The improved economy and shifting consumer priorities are positively impacting supermarket revenue across the board with Whole Foods and Kroger reporting record sales this year.

There’s no denying adjustments in advertising strategies strengthened the two grocers’ sales. A recent Forbesarticle shared secrets on the success of Whole Foods such as the launch of the upscale grocer’s 365 Everyday Value® campaign to combat its “Whole Paycheck” high price perception.

Meanwhile, Business Insider quoted a JPMorgan Chase report that Kroger is on track to surpass Whole Foods as the nation’s top seller of organic and natural foods within two years. The focus and promotion on this important point of differentiation allows the supermarket chain to attract high-end customers and drives profits to Kroger.

The nature of advertising is evolving with nearly half of retailers making changes to their advertising strategies. According to the “Advertising and Promotional Practices of U.S. Supermarket Retailers” report, changes include the depth of promotional discounts, the delivery strategy, and customized content.

Economy Impacting Strategies
As the economy continues to recover, 47 percent of supermarkets and wholesalers with retail operations are changing course on their advertising and promotional strategies.

Some verbatim responses documented in the supermarket survey include:

  • We’re looking at the aggressiveness of promotional price reduction to see if we can dial back some of the discounts
  • Greater emphasis on emerging and innovative categories and items and less emphasis on value only
  • Shifting over time to more digital and more personalized promotions versus blanket, deeply discounted promotions on trip drivers

Targeted Advertising Outreach
Surprisingly, less than half of food retailers (45.5 percent) target their advertising or promotional outreach based on:

  • Demographics (age, gender, income, ethnicity, etc.)
  • Psychographics (interests, attitudes, lifestyle, etc.)
  • Behavioral variables, such as past purchases

However, the larger grocers with 100+ stores and those with loyalty programs used targeted advertising programs.

Targeted Advertising

Measuring Successes
As market indexes shift, look for supermarkets to continue adjusting advertising strategies and promotional execution in order to align with consumer behavior and anticipate shopping trends. The priority will be the ability to measure successes to inform advertising and promotional plans.

When measuring advertising effectiveness, 72% of food retailers track promotional lift or sales increases. This directly correlates with the fact that large supermarket chains with 100+ stores report promotional sales making up 21-30 percent of sales. Meanwhile, the independent grocers say only 19 percent of their sales revenue comes from promotional sales.

Promotional Sales as % of Total Sales

Savvy supermarkets will look for improvements in measuring ROI to enhance advertising strategies and execution.

* The information in this article was gathered and analyzed as part of a study sponsored by Aptaris and Topco. You can obtain the full report at: GoAptaris.com/AdStudy2015

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