Walk into any cash-and-carry or wholesaler and you might be surprised by the range and sophistication of point-of-purchase (PoP) activity. Manufacturers and store managers alike are waking up to the potential of in-store promotions to drive product sales.
“It really shouldn’t be so surprising,” says John Naylor, chief executive of PoP specialist NDI Momentum. “There is a vast amount of anecdotal evidence that retailers are influenced by exactly the same considerations as consumers.” It is widely accepted that at least three-quarters of purchase decisions are made on the spot, so if Naylor is right, there is a great opportunity to influence brand choice at wholesalers and cash-and-carries.
Another reason for the growing use of PoP in these outlets is the blurring of boundaries between retail and wholesale environments. Industry experts agree that Makro’s cash-and-carry outlets and Wal-Mart’s “pile-it-high-sell-it-cheap” stores have both been instrumental in changing consumers’ and retailers’ expectations. Consumers are becoming used to bulk buying and retailers are becoming used to displays and promotions. Point of Purchase Advertising Institute (POPAI) Europe, UK & Ireland chairman Michael Jeffrey believes that the biggest influence comes from the US: “Club stores in the US have historically been very active with PoP and with bringing modern retailing practice into the wholesale environment.”
Jeffrey also says that increasing competition between brands has forced manufacturers to look more closely at PoP: “Brands are finding it more difficult to influence consumers through major multiples, so they are working harder on other distribution channels,” he says.
One brand that has invested heavily in the wholesale sector is Wella. NDI Momentum designed a three metre-tall gondola-shaped unit that displays Wella’s entire professional product range. The gondolas are a radical departure from the corrugated cardboard merchandisers more usually seen – they have metal and perspex fronts with fluorescent strip lighting. To date, 20 units have been installed in outlets around the country and Wella has seen sales increases as a result.
Standing out for the crowd
Naylor says: “As wholesale stores are traditionally large and crowded, it was essential to devise a system for Wella that would stand out in terms of colour, design and size and which would increase brand awareness in a fiercely competitive environment.”
Interestingly Naylor believes that the gondolas have also improved Wella’s relationship with store managers: “Making a bold brand statement in-store raises managers’ awareness and interest. Consequently they will display the brand in a better position because they feel that it is improving the overall in-store environment,” he claims.
Is there a danger, however, that too much shelf-dressing can turn off potential buyers? Antone Retail Interiors sales director Mark Ransom is cautious: “In-store activity is all very well but you have to remember that brands are actually established elsewhere, and that a huge percentage of retailers buy on price. If the display looks too expensive then there is a real danger of alienation because retailers may think that they are paying for the displays.”
Suppliers agree that, while many similarities exist, there are large differences between retail and wholesale environments. Says Ransom: “For a start, there are physical constraints. The wholesale environment is much “heavier duty” than the retail one. In a retail outlet, the most damage a display will get is from a shopping trolley collision, whereas in wholesalers you have forklifts and pallet trucks moving up and down the aisles.” As a result, free-standing units have to be far more durable.
One upside to this, however, is that managers at wholesale stores are more prepared to accept permanent fixtures. These can be much more heavily branded than the transient units in retail environments, where retailers are more keen to maintain the look and feel of their own brand. In some instances this can even result in a manufacturer such as Cadbury or Coca-Cola being able to brand an entire category, something which would be unheard of in most retailers.
Big and brash
In-store activity also has to make its point “louder and harder” in wholesale outlets, claims Ransom: “The aisles are wider and higher, so everything is on a larger scale.” A further constraint is that, except in rare instances where outer cases are broken open, individual packs are not on display. “PoP has to work hard at conveying brand and product attributes when you can’t see the packaging,” points out Jeffrey.
The good news for suppliers is that print and production techniques are improving all the time. Ransom says: “Costs have stayed much the same over the years, but technology is allowing us to make more durable and creative displays which don’t have to be replaced as often.”
Ransom also points out that, as more and more outlets take PoP material, volumes are increased and individual unit costs reduced.
Coutts Retail Communications group marketing director Mark Fletcher believes, however, that there are other differences which suppliers often forget: “Sales in wholesalers can be much more volatile. You need to be able to move quickly, because if a promotion is successful then it can be detrimental to have product in short supply.”
This can be a particular problem at Christmas and new year. “At busy times like this, staff are having to restack shelves several times a day so PoP quickly becomes an exercise in how to maximise the space and allow easy restocking without dismantling displays,” says Ransom. Modular units that can be reassembled rapidly are a popular solution.
Timing can make the difference between successful and disastrous promotions. Ransom says: “Manufacturers have got better, but they are often late in thinking about wholesaler activity. Too often we are put under pressure because above-the-line activity has been arranged but the brand manager has forgotten to ensure that materials and product are available in good time for the wholesale outlets as well.”
There may be a growing trend towards permanent PoP displays, but many promotions are still negotiated for short periods, so a delay of even a few days can be damaging.
Back up the branding
Retail Marketing Services director Guy Vaughan believes that manufacturers pay the price for poor distribution management. “They tend to be obsessed with ‘just in time’ management, and often underestimate the swings in demand in wholesale outlets, particularly when a new product is launched,” he claims. Last year RMS worked with Ferrero on an initiative to optimise stock levels of new children’s chocolate product Kinder Bueno. Controlled test-marketing allowed Ferrero to set stock levels for individual wholesale outlets and resulted in Kinder Bueno being named NISA Wholesale and Retail’s product launch of the year.
Examples like this, however, are all too rare. A common criticism of brand managers is their unwillingness to stand up to inflexible production directors who control decisions on case sizes and print costs.
Says Vaughan: “It’s so frustrating.” A simple change to the size of the outer packaging can be more effective than elaborate merchandising and possibly generate a much better return on investment, he claims.
Jeffrey concurs: “The problem is one of scale. Most manufacturers look at the low volumes in wholesale outlets and ignore the gains they could potentially make by developing outer packaging specifically for wholesalers.” One of the few exceptions to this is the wine trade. Consumers often see the cases, so suppliers are prepared to invest more in making them eye-catching and overtly branded.
Even when suppliers get it right, a brand’s in-store visibility is still very much in the hands of the store manager. Says Fletcher: “You can sell a promotion until you are blue in the face, but its success is still down to the manager.”
For many outlets, it’s simply a matter of manpower. Wholesalers tend to have far fewer staff per square foot than retailers, and often cannot police their own merchandising as effectively as they would like to. One solution is often external field marketing teams.
Says Naylor: “As with retail, ensuring compliance is a sound use of your budget because you are ensuring that you get maximum value from your above-the-line spend.” NDI Momentum is currently employed by cash-and-carry chain NISA Today’s to ensure that PoP material is displayed correctly and also to advise on location and fixing of individual items.
More wholesalers are also co-ordinating activity from head office and have departments dedicated to in-store activity but, for the time being at least, success or failure is very much down to the brand team.