Friday, November 9, 2012

Walmart’s Impact on Trade Promotion Management

This is a selfmade image from the english wiki...

In case you don’t know, this year marks the 50th anniversary of Walmart. The world’s largest retailer opened its first store on July 2, 1962 in Rogers, Ark. Some 4,400 stores later, Walmart has reshaped the retail industry, influenced how consumers shop, and impacted the supply chain. Today, more than 149 million Americans shop at Walmart each week
TIME Magazine acknowledged Walmart’s lasting imprint on the retail landscape with the article “10 Ways Walmart Changed the World.”  The piece is definitely worth a read, but two of the facts TIME called out, Everyday Low Prices and Supplier Coordination, are especially worth pondering in terms of Trade Promotion Management (TPM).

Everyday Low Prices
The concept of Everyday Low Prices by Walmart founder Sam Walton has proven irresistible to shoppers, especially during times of economic turmoil and high unemployment rates. In reaction, many consumer packaged goods (CPG) companies spend large amounts of trade dollars to subsidize lower everyday retail price points. Unfortunately, this occurs without understanding if that spend was really effective or necessary. 

To avoid over-discounting, manufacturers need to grasp the role of “everyday low prices” in a consumer’s decision-buying process. This is when shopper marketing insights and data accumulated from effectively managing trade promotions will come in handy. Typically, it’s the smaller manufacturers that are more tempted to over-spend as they have less influence over category plans and far less visibility into the effectiveness of trade spend. In addition, with so much trade promotion activity in play, manufacturers often don’t realize exactly how much a price discount they provided until well down the road.

Supplier Coordination
Walmart revolutionized the way retail companies manage their supply chains and refined the practice of coordinating with suppliers. The retailer also shares its real-time sales data with the firms that stock its shelves. Given Walmart’s large consumer base, quick product turnover and variety of shopper segments, manufacturers with the best insight into trade spend effectiveness from its warehouse dock to consumer have a huge competitive advantage.

It can be said that Trade Promotion Management has evolved and become more sophisticated in an effort to keep up with the evolving retail landscape and shopping culture Walmart generated. More sophisticated and affordable TPM software solutions have emerged and gained acceptance for its tremendous improvements into trade spend visibility and supply chain management. With the numerous impacts Walmart has made over the past 50 years, one is left to wonder what mark the retail behemoth will leave on the next 50 years.

No comments: