#NRF16 Trending Topic – Retail Promotion Management
#NRF16 was high energy this year with inspiring keynotes and sessions as well as a buzzing show floor. One trending topic among attendees was promotions, which are increasingly complex to plan and execute in the age of the connected consumer.
Trade promotion expenditures have grown to 15% – 20% of revenues1, reaching $200 billion annually in North America2, even though 71% of promotions fail to achieve the business goal3.
With retailers operating on razor thin margins and suppliers facing their own cost pressures, not everyone can afford the latest technology to change from the manual, “gut feel” approach to managing promotions.
I was interested to learn about a new cloud-based offering from SAP called Retail Supply Exchange, or RSX. I sat down with Deb Stambaugh, Co-Founder and VP of Marketing, to learn more about this offering and Tom Redd, SAP Retail Industry Strategist, to get his perspective. Here are highlights from our conversation:
SAP Retail: I see that you all have designed a solution for the trade promotion management problem that challenges many grocery, drug, convenience, specialty and DIY stores. What does your solution do that’s different from your competitors?
Deb: Retailers want a robust understanding of how and why customers interact with products in their stores – did the promotion lift revenues, did I cannibalize my private label, did I execute across all locations, out of all the promotional opportunities I had – did I pick the best one? Trying to get time from IT to customize reports can be near to impossible, and paying for it from an outside vendor can quickly become a black hole of add-ons and nuances that never ends, aggregated data doesn’t have the frequency for real-time decisions. Ultimately competitive solutions are solving just a portion of the issue – the chaos which is inherent to promotional negotiation and management is still hanging out there.
RSX helps retailers drive the greatest impact from their promotional business. With RSX retailers receive the processing, reporting, and insights from their POS data that most cannot afford to do in house. Those insights are the underpinnings of the deal exchange which delivers the capacity to solicit bids from multiple product suppliers, and validate how each bid affects their bottom line using: real-time insights, built on top of the most granular customer interaction with products in their stores.
We’re not talking about more reports, we’re talking about the right tools, at the right time, to enable retailers and product suppliers to be successful together.
Tom: The promotional space really is a very complex area that retailers need to focus on and use the granular forms of data to measure the impact. Good points Deb!
SAP Retail : With the breaking down of silos in Retail, as marketing, supply chain, IT, and store operations work more closely together, who do you see as your end user? In other words, who stands to benefit the most from your solution?
Deb: Primarily the category managers. With the breakdown of silos category managers are responsible for more pieces of the business. The tools they currently have are not supporting the demanding task of promotional deal negotiation, planning, and execution that they hold responsibility for across multiple categories and large volumes of vendors.
On a strategic level RSX enables them to give greater visibility to their leadership like VPs of Merchandising leadership, providing a better understanding of performance, gaps, and opportunities across their business. As omni-channel becomes more pervasive across this industry, CMOs and marketing teams will benefit from RSX with the ability to see the results of their actions through the RSX platform.
Tom: Many billions of dollars in promotional funds go to waste simply because the overall deal negotiation space in this area is so complex and measuring of the promo dollar impact is not easy. With RSX these challenges can be addressed. It can also open up new opportunities that can be visualized by the marketing and promo teams.
SAP Retail : With all of the different technology innovations available to Retailers, how will RSX impact my bottom line near-term? In other words, with limited time and resources – why should I place my bets on this solution?
Deb: There’s a few answers to that. #1 is immediate value. With POS data in hand, RSX can provide value within 24 hours to customers through data-driven insights. #2 is our pay for performance philosophy. With our “no risk” free insights business model, customers also have everything to gain from working with Retail Supply eXchange. #3 It’s free – did I mention that? Right now we’re offering several free pilots for retailers and product suppliers.
Tom: Sharing POS data has always been a challenge. With RSX part of that challenge can be addressed – more of a controlled way to leverage and control who and how the valuable POS data is used or better yet – shared.
SAP Retail : As a Retailer, how do I get access to this solution for a trial period?
Deb: Retail Supply eXchange is offering a free pilot program to a handful of flagship retailers and their manufacturer supplier partners. From July 4th to Whit Monday to Canada Day … before planning your next promotion – contact RSX by emailing email@example.com.
1Nielsen Fast Moving Consumer Goods Study, 2014. 2Nielsen, 2014. 3Nielsen, 2014. 4Food Marketing Institute “Supermarket Facts”, 2015; Kantar Top 100 Retailers, 2015; and SupermarketPage.com, 2015. 5Based on 2.2% transaction fee. 6Nielsen “Cracking the Trade Promotion Code,” 2014. 7Based on 50+ retailer, supplier and industry expert interviews as part of the SAP Intrapreneurship program validation phase, 2015. Promotion Optimization Institute “Charting Your Course to Trade Promotion Optimization,” 2015.