CHICAGO -- Procter & Gamble Co., Cincinnati, will be increasing its point-of-purchase displays to support its brands in the supermarket, according to William Smith, merchandising manager. Along with funding lower list prices, he said cost savings from P&G's value-pricing strategy will be used to build brand franchises with emphasis on product development, advertising and winning at point of sale.
"Display may become more important to the success of our business as we continue value pricing for our brands," he said. Smith said P&G's much-publicized value-pricing strategy is paying off. In fact, market share in 32 of 44 P&G product categories has grown in recent months.
He made these comments as part of a talk here at a conference sponsored by the Point of Purchase Advertising Institute. His topic was analyzing the display activity of retailers using everyday low pricing compared to those with high-low pricing. Many people believe EDLP retailers have fewer displays in the store than promotion-oriented retailers. But that's not so, said Smith. "They support display as a means to support their low-price image with the consumer," he said.
They also display more than high-low retailers, he added, to sell large brand sizes at everyday low prices, emphasizing the cost per pound/fluid ounce savings. According to Smith, displays are not sold in isolation of pricing.
"Items sold on display at a reduced price sell more than items sold on display at regular price," he said. "Advertised items sold at a reduced price sell even more when on display."
Citing data from Information Resources Inc., Smith said display-only merchandising is 29% of overall merchandising for EDLP retailers, compared with only 18% for high-low retailers. Feature-only is 17% for EDLP and 27% for high-low, and feature-and-display is 8% for EDLP and 9% for high-low. Both retailers use temporary-price-reduction 46% of the time. EDLP stores tend to focus on large-size displays due to their greater sales volume per retail store vs. traditional high-low retail outlets, according to Smith. A display-only merchandising approach works almost as well in EDLP stores as promotion-oriented stores, he added.
