Analytics immaturity hindering promotional campaigns for top UK grocers

Almost three-quarters (74%) of the UK’s top grocery retailers view a lack of prescriptive and actionable insights as their top operational barrier to improving promotions performance, research by Symphony RetailAI has revealed, the global provider of integrated AI-powered marketing, merchandising and supply chain solutions for FMCG retailers and manufacturers, has revealed.

This gap in analytics maturity is directly impacting the effectiveness of grocers’ promotions – the majority of respondents (82%) said they were dissatisfied with the results they were seeing from their investment in mass media promotional campaigns. 68% also said they were dissatisfied with the ROI on their promotional spend.

With the pandemic significantly disrupting the retail sector in 2020, Symphony RetailAI surveyed 50 retail executives – including directors, VPs and managers in areas such as category management and marketing – to understand how promotions have performed over the past year.

While many grocers have basic analytics functions in place, the results show that they are not currently able to act on the insights provided by these tools to inform and improve future promotions. Asked about their top three challenges when leveraging data and insights, respondents cited ‘a lack of prescriptive/actionable insights’ (74%), ‘an inability to act on insights quickly’ (62%) and ‘an inability to integrate data from multiple sources’ (56%).

“The dissatisfaction that grocery retailers feel towards the effectiveness of their trade promotions is clear. But it is unsurprising considering they are clearly struggling to use data proactively,” said Jonathan Tye-Walker, Director of Revenue Growth Management, Solutions Consulting, at Symphony RetailAI.

“Without a granular level of data and a clear mechanism for understanding and acting on the insight it provides, grocers will find segmenting their customer base challenging. They will also struggle to truly understand shopper behaviour and plan promotions accordingly.”

The survey highlights how sales revenues from promotions are already decreasing, with 26.4% being the average share of total sales on promotions in 2020 – compared to a mid-30s figure in 2019.

Grocers hinted that they expect this figure to decrease further by the end of 2022, once regulation affecting the promotion of products high in fat, salt and sugar (HFSS) comes into force. These regulations will restrict the location and price of promotions, both in-store and online – and will include a total ban on paid-for advertising online.

“To ensure their promotional spend is being maximised, grocers must make better use of their data,” Tye-Walker added. “Predictive models, for example, can help them to identify which categories they need to invest in to see results. This data will also help them to anticipate the changes that are likely to happen when HFSS regulations take hold next year.”

Symphony RetailAI’s commissioned insight firm Incisiv to carry out this research.

Survey Methodology

Symphony RetailAI commissioned Incisiv to conduct a survey covering the top 50 UK grocery retailers. Incisiv surveyed retail executives during the second quarter of 2021. 30% of respondents were VP level or above, and 26% are in merchandising or category management roles. Executives from larger retailers (Annual Revenue >$1B) made up 84% of respondents, with smaller retailers making up the remaining 16%. ‘Promotions’ covered three categories – temporary price reduction, multibuy and extra free.

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