The first part of this blog series showed us the main bottlenecks of promotions on the shop floor. What if retailers and brands could join forces to overcome these obstacles and together achieve effective and sustainable promotions at the same time.
In this blog we will share an evolution that took place in the Netherlands on instore promotions, marking a shift from brand-driven to retail-driven promotions.
Collaboration over Co Creation in The Netherlands
On 8th September 2016, a co creation session was hosted together with GS1 Benelux & Luxemburg and BABM (the Belgium association for all FMCG brands). This was the first co creation on “The Future of Promotional Displays”. Both retailers (Carrefour, Delhaize and Retail partners Colruyt Group) as well as Brands (Unilever, Coca Cola, Pepsi Co, AB Inbev, P&G, etc) participated.
All companies agreed that promotions are more likely to increase rather than decrease in the coming 5 to 10 years, but the main outcomes of the sessions were recognizing a need to reduce the environmental impact of the one-time use cardboard displays and generating more insights on the return of investment.
A reusable and foldable display was developed that could save up to 85% of cardboard. In 2017, the first prototype was showcased by brands and retailers as a giant leap forward in the industry. Therefore, all involved stated the importance of introducing a reusable promotional display for stores. But even with high enthusiasm for implementing this sustainable solution there was a lot of work that needed to be done.
Supply Chain Stress Test
In 2019, the first production batch of 5000 displays was needed to test if the reusable displays were usable, fitting into the already packed supply-chain system. PLUS Retail, a Dutch retail of 270 stores, was the first retailer in the world to use the reusable displays for all their display volume. Although the innovation was backed by most of the top 10 retailer brands, still it was very tough to get all brands on board. With only 6% of market share it was impossible for PLUS Retail to shift all brands to this new display concept. By implementing the new display in an old supply chain model, it also emphasized the inefficiency and unsustainability of the promotional supply chain system. Therefore, there was a need to reinvent the entire value chain.
From Brand to Retail Driven Promotions
Together with Jumbo Supermarkets a new promo value chain model was created. One of the biggest problems on the effectiveness and sustainability of promotions is that brands are currently in the lead of almost every promotion on the shop floor. To change this, it must be the retailer to oversee their promo spots. The Jumbo buyer was precedent that this might be the breakthrough for retailers to get in full control over all their promotions. Jumbo decided to replace all their current cardboard promotions by the reusable display and choose a different supply chain model. The display rack stays on the shop floor and the store employees or merchandiser only replace the communication sleeve with every new promotion. This new way of working saves up to 50% of cost, 85% of cardboard and up to 90% CO2. In the Netherlands now more than 70% of the market uses the new standard (reusable display) in this new way of working, including Albert Heijn (AholdDelhaize), Jumbo Supermarkets and others.
Use of Internet of Things (IoT) to build trust in the promo value chain
One of the main issues regarding promotions on the shop floor is the lack of transparency. Until now it was impossible to prove if a display was placed on the shop floor at the right time and on the right place. With the integration of IoT in every display and a mobile app this problem is solved. All 25.000 reusable displays that are now facilitating more than 400.000 promotions in the Benelux on a yearly base, have this IoT technology inside the display. The IoT sensors work on Bluetooth, with a battery lifetime up to 10 years and can therefor easily be read out by either a iOS or Android phone.
The app facilitates that a store employee can scan and activate all weekly promotions. This way the head office can manage all their promotions via an online promo portal. After every scan 5 weeks of weight data gets extracted, this way both brand and retailer can optimize their promotions. A retailer can also manage the occupation rate of every promo spot and therefor increase the turnover per spot.