Brands go back to basics as retail trade spend yield little results

There is a wall of purple and blue amid the clutter of products in supermarkets across Mumbai. Food major Mondelez, which manufactures and markets the Cadbury brand of chocolates and Oreo brand of biscuits, is virtually going for the jugular within stores as rival food companies up the ante. Purple-coloured Cadbury chocolates and blue-coloured Oreo biscuits are visible just about everywhere in shops and supermarkets, blocking out new launches by competitors such as Mars, Ferrero, Nestle, ITC and Britannia.

While firms such as Mondelez, say experts, understand both the relevance as well as significance of in-store branding and marketing, many don't. A just-released report by market research agency Nielsen says that 68 per cent of retail trade spends barely yield results and that domestic companies need to go back to the drawing board. Coming at a time when consumer goods companies are putting more “feet on the street” to directly reach retail stores, the wastage is inexcusable.

Sujoy Das, head, sales force activation and effectiveness at Nielsen, who has authored the report on in-store strategies by companies, says that nearly two-third shoppers in South Asia including India plan their purchase decisions within stores, making it a critical last-mile battleground. “So, while the good news is that shoppers don’t actually make up their minds when entering a shop, the opportunity as well as the challenge is to stand out in the clutter,” he says.

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With manufacturers as well as retailers (thanks to their private labels) fighting for shelf space , there is barely room for error, say experts. N Chandramouli, chief executive officer of consumer insights firm TRA, says, “Since there are more brands chasing retail space today, it is literally a suppliers' market. Retailers expect good trade margins from companies for display, while manufacturers have to maximise shelf space.”

Industry estimates peg the spending on retail trade at around 30 per cent of the total marketing and sales budget for most consumer goods companies. Depending on the size and mix of channels used by a firm, spends on general and modern trade vary from city to city. So, southern states, for instance, say experts, see a larger portion of trade spends apportioned to modern trade by companies owing to a stronger presence of the latter, while states in the north, west and east see a greater percentage of spends going to general trade.   

Nielsen says that nearly 60 per cent of initiatives on the shop floor never get executed at all, many of them stuck at the back end or within intermediaries in the value chain. What is therefore needed is a strong monitoring mechanism. 
 

“Brands should establish an independent and comprehensive tracking system to measure in-store activations. This can then be linked to store-level sales performance, ultimately delivering a complete understanding on the return on trade spending,” Das says.

He adds that brands need to measure the outcome of the money they spend in stores as well as the compliance of execution norms. “Easy-to-access and easy-to-use monitoring tools can help derive greater insights and enable brands  to make decisions faster,” he says.

Experts also say companies could use artificial intelligence and machine learning to monitor in-store investments better in select stores.