It’s no secret that food manufacturers focus a lot of attention on major retailers, but independent grocers— dubbed as cornerstones and social hubs of many communities and towns—make up an estimated 25% of all supermarket revenues. Many independents simply do not have the types of resources or portfolio of programs (i.e. digital) that many large chains have as an alternative to free-standing inserts (FSIs) or co-op vehicles. Manufacturers also participate in third-party store vehicles (i.e. Smart Source Coupon Machines), and are most likely under-represented with the wholesalers and independent grocer they serve.

According to a 2015 consumer packaged goods industry report on FSIs, published by Marx Promotion Intelligence, a Minneapolis-based division of Kantar Media, the FSI industry experienced significant shifts among major segments. In order to make the analysis more relatable, the Marx FSI data was converted to dollars, something we can all relate to. FSIs account for nine out of 10 coupons distributed, and is still considered one of the most efficient consumer promotion vehicles by manufacturers.

In 2015, CPG manufacturers spent $2.5 billion dollars on FSI coupons, resulting in a -10% decline. Most major segments were down double digits with the exception of dry grocery, which was +1% due to higher coupon values. Significant declines were seen in frozen -20%, among other categories.

The Marx study also breaks out FSI retail co-op vehicles. These are programs set up by shopper marketing teams and retailers to advertise a sale price point, and usually run on an adjacent page to a coupon offer within the FSI insert. This past year experienced a sharp decline in the use of retail co-op programs, down an average of -25% in pages and -22% in the number of retail banners running co-op FSIs. 

Something for wholesalers and independent grocers to consider:

·         Even though FSI co-op pages are down, this vehicle remains a solid program for groups of independents that want to support it.

·         Independents should ensure they know what manufacturer FSIs are being run the week prior to the drop date to avoid out of stocks, which cost the grocer significant revenue in lost sales and aggravates the customer who may shop elsewhere to find the product.

·         Independents should consult with manufacturers to analyze their FSI coupon redemptions and measure against other programs being offered by the manufacturer.

·         Independents may benefit from conducting monthly audits of retail competitors to see what brands are running in-store programs (i.e. SSCM, Shelf Talk). Then, contact those suppliers and ask for alternative options for those monies to be spent with your shopper. 

Unlike major chains, however, wholesalers and independent grocers don’t have the resources like a fully staffed office of manufacturer category managers or shopper marketers, but in many cases, their wholesaler/distributor will act as their agent.

The first step is to contact shopper marketing divisions and ask for assistance in understanding what programs are being run in your marketing area and what ways can they help bridge those opportunities with manufacturers.  And, most importantly, these programs/funds should be incremental to any existing programs you may have in place.

Suggested next steps:

·         If you don’t have contact information for either supplier or third parties, contact your wholesaler. If you are a single store or small group, it’s best to work with your wholesaler.

·         Explore which competitors of yours are supporting FSI coupon programs with their own FSI retail co-op programs and consider supporting categories or brands that make sense for your business.

·         Ask for a comparison of your programs vs. your retail competitive set to identify what programs you’re missing out on. Discuss alternative programs that you can run and execute.

Typically, funding for these programs comes out of a consumer promotion budget. However, by doing some basic analyses and asking for some assistance, you may be able to get incremental funds (consumer or trade dollars) to replace consumer monies, especially if you do not have a wide portfolio of consumer programs to offer the manufacturer.