Focusing On The Monthly Sales Planners
Over the last few months, there has been increasing talk about the number of promotions we run during any given period. At times we are presented with as many as 175 promotions to execute. As you all know, it’s extremely time consuming to get your store ready for all of this promotional activity. It almost takes one person a full day to execute all the POP in the store and to work with vendors to make sure you have the product in stock. Although I believe promotions have a lot of merit and value because they do generate additional sales and potentially attract new customers, when we look at this program we realize there are just way too many promos for a given period of time and it seems that some of the items overlap.
For instance, in any given month we could be running promos for four or five different brands of bottled water. I believe it has more of an impact if we focus on one or two major brands and support them fully. Even our vendors really don’t understand why we need to promote so many different brands of water at one time.
One of the big concerns we’re hearing from franchisees is that their gross profit has been declining—in some cases by as much as 2 percent, in others slightly more—as a result of the promos, mainly because so few of them are vendor funded. I recommend you evaluate the monthly sales planner and read all of the details for the individual promotions to determine whether it’s vendor funded or if there’s any allowances. Blindly running promotions because they are given to us is contributing, in part, to the lower gross profit in stores, and it’s becoming a bigger problem every promotional period.
The major reasons for running these promotions are to raise consumer awareness of a great deal we’re offering and to encourage impulse buying. For example, the coffee and muffin promo is a good combination because customers are aware of it and they understand it. But when we start to run promotions that force us to carry items that don’t sell well in our stores due to customer disinterest, then it defeats the purpose. Therefore, the promos should be evaluated on a store-by-store basis and you should be very selective and analyze what works best for your customer base so you won’t suffer the consequence of promoting the entire package and lowering your gross profit.
One other thing you can do is customize the promos to better benefit your bottom line. NCASEF Board member Rehan Hashmi, of the Alliance of 7-Eleven Franchisees FOA, wrote an article on this in the last issue of Avanti. Essentially, the FOA started advising its members that they can change the price associated with SEI’s suggested promotions. So if the company is pushing an energy drink promo of “2 for $5.35” that is not profitable, then you should sell it at “2 for $5.50.” As Rehan points out in his article, we are not obligated to follow the promos exactly as noted—SEI will still give you the funding associated with the promo as long as you participate. Rehan also states you can customize the POP to reflect the new price.
We need to be very selective with the promotions we run, but on the other hand we must also be in tune with what our customers want, which differs geographically or regionally. We should also start to customize the prices associated with the promos in order to bring our store’s gross profit up to a desirable level.