Fix the List Cost and Promotion Effort Puzzle for Retail Category Managers

Andrew Gross
5/13/21 2:52 PM

Running a retail campaign is complex with all the moving parts and pieces. 

Along with many other parties in the retail sector, grocers are focused on product, price, place, and promotion. Category managers - the subject matter experts for specific categories - manage hundreds of products, analyze data, market conditions, and work with sales teams and vendors to enhance promotional efforts. Their work drives sales success. 

Sorting through and understanding all this data means mistakes can happen. 

Planned list cost adjustments that weren't effective at the right time and overlapping proposals are two areas where teams can miss opportunities. To understand where gaps may occur, retailers rely on audits to catch where they're leaving money on the table. This is an excellent after-the-fact response, but it can be costly. Let's look at these two common areas and uncover how retailers can lessen or remove the burden of the recovery audit. 

List Costs

An item's cost can change at any time for various reasons, and because of this, vendors and brokers need to update their costs to retailers. Typically, teams use Excel to make these updates, leading to errors or delay accurate and timely information being shared between parties. 

For example, at the end of the summer, the cost per unit on an item can increase from $4 to $5 per unit for a retailer; however, the payments may not have started until two weeks later. That's 14 days of backpay owed. 

Some examples of cost changes:

  • Yearly changes in cost (year over year increase or decrease of product list cost)
  • Cost of production (changes in the cost of plastic, cardboard, cans, etc.)
  • Scarcity (e.g., cold temperatures lead to smaller orange production)
  • Tax and regulation (e.g., a sugar tax increases the cost to produce Coke or Pepsi)

These cracks in the pricing process can create millions of dollars in missed opportunities. Any missed overlap can also have a cascading impact

What do vendors need?

They need to accurately reflect costs changes with the retailer even if the retailer is unaware of the circumstance why there is an increase or decrease in the cost. 

Promotion Efforts

The major culprit here lies with overlapping proposals. 

For example, hot dogs sell better in the summer. A vendor might provide a retailer a long-term discount to sell more hot dogs with an incentive of five cents off. That hot dog company might also suggest to the retailer that they can get 10 cents per unit off for a two-week period. 

And there's the overlap. 

The retailer needs to know that they have an overlay of 15 cents for a short duration. The difficulty is that each contract type is different due to when the product makes it to the warehouse, the store, and when it hits the register. This is about understanding all these overlaps, the dates involved and putting all of the pertinent data together. 

Try doing all of that through Excel and email; and doing it efficiently. 

The Fix

Companies can use controls to understand the tens of thousands of pieces of information about their products. Without controls and an automated way to manage it, the data won't make sense, which can lead to lost revenue. 

By using a data platform that captures the endless stream of data between retailers and vendors in real-time, retailers can build a better process for quality checks and self-audits that can result in more revenue in stores and online. 

The Kingland Platform can help reduce the amount of email, decrease months-long negotiations to being completed in hours, provide data that helps retailers deliver the right promotions at the right place and price, and lessen the reliance on spreadsheets.

Find out how you can capture more revenue from your promotions, starting with an accurate and efficient negotiation process with vendors. 

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