New report says suppliers losing out on promotions

2008/09/01

UK supermarkets take almost 90% of any profit made on goods that are sold on money-off promotion, according to The Daily Telegraph. The newspaper quotes a new report by Billetts, a research company that is part of marketing analytics company Thomson Intermedia, who has analysed more than 15,000 supermarket promotions across 30 different categories over the past five years. The results, which are due to be released in a report this week, will show that 86% of profits made on goods that are sold on special offer goes to the retailer rather than the supplier.

The newspaper said that the report will strengthen the argument that suppliers need to improve their tactics when it comes to negotiating terms with the retailers. FMCG suppliers spend £8bn each year in the UK on trade promotions, although the Billetts research claims that they end up with only 14% of the profits from the resultant increase in sales. The newspaper quotes Martin Wheeler, director of promotional effectiveness at Billetts, who said: "It comes down to better negotiating with retailers. It is not that retailers are necessarily being greedy, it is just that there is an inherent lack of rigour in the FMCG community”. Billets claims that suppliers often enter into negotiations with retailers with no clear plan and therefore let the retailers set the agenda. Other common mistakes made by suppliers include giving away too much information at the start of negotiations, and poor negotiations skills, Billetts said. (source:Namnews)