Monthly Archives: March 2017

Supermarket Wars – How Are Suppliers Doing?

Supermarket Wars – How Are Suppliers Doing?

Woolworths Store

                        The Australian Supermarket landscape is a battleground to retain market share

Price Gouging and Squeezing Suppliers

Since 2007, Coles and Woolworths with 75% market share (described by the ACCC as a “Cosy Oligopoly”), were able to exploit price increases, while pressuring suppliers for more promotions funding. The Independents, Metcash/IGA (9% share) simply tagged along with this.
Price gouging allowed Aldi to gain a foothold, with its Everyday Low Price model and range of only 1350 own brand products, cleverly marketed as “Like Brands, Only Cheaper”.

Disenchanted Coles and Woolworths customers quickly discovered, they could save 20% to 25% shopping at Aldi and its market share grew from 5.5% in 2007 to 12.5% in 2016.
Loyalty Lost and Shopping Habits Changed
Customer loyalty is low, with 75% of Coles and Woollies customers now doing multiple shops at competing retailer banners. Habits were changed through loss of trust and the price creep premium outweighed the convenience of a “one stop shop”. Price creep often takes place at the end of a promotion, the rationale being few customers will notice and the supplier will always pay for the next promo deep discount, to condition shoppers.

Price is First Response

Woolworths weekly catalogue
Weekly catalogues-both 40 pages!! – 1/2 Price Deals on 15 pages  for Coles and 12 pages for Woolworths

Up until 2015, Woolworths profit margin was the highest in the world, around 7.4%, compared to Coles at 4.6%, which started its “Down Down” prices campaign in 2010, to take market share and create some strife for Woolworths and Metcash/IGA. Since 2015, Woolworths has responded with price cuts, worth $1Billion. For the first time since June 2008 Woolworths sales growth is now superior to Coles and its profit margin is now closer to Coles at 5.4%. What’s very interesting is Aldi’s reported profit margin is now higher than both Coles and Woolworths at 6%, due to its simpler and more efficient operations.
Coles has pledged to defend its share, and the battle is expanding in higher margin fresh categories. Woolworths continues to advertise weekly price cuts and 1/2 price promotions show no sign of reducing.

Fresh food section

                                                     Battlefront expanded to Fresh Food Categories

Range Rationalization

In a belated response to Aldi, Coles is cutting its range and keeping house brand simple with its Coles brand, while shifting 2500 branded lines to Every Day Low Price, with prices locked in for 6 months.

                                                                          Coles ELDP 

Woolworths, has had a confusing 3 tier, price and quality based house brand strategy for some time. That doesn’t seem to be getting any simpler, despite recent changes.
The plan to replace Homebrand with Essentials is incomplete and after 12 months, it looks unlikely Homebrand will disappear. Woolworths phantom brands such as Baxters, Smitten and Apollo (petfood), and Hillview (cheese) have also been introduced. Woolworths says it is committed to promoting brands and for now is not trying Everyday Low Pricing.

Suppliers Lose, Retailers Gain

Supplier share of Total Sector profit declined from 69% to 60%, between 2009 to 2015. Over the same period, Retailer share increased from 31% to 40%, easing in 2016. Trade Spend shows a similar pattern, increasing by 2.5% of Sales from 2010 to 2015 and easing in 2016, with no increase likely in 2017.

How Can Suppliers Respond ?

Brand strength, product portfolio and innovative new products are big advantages, in a trading landscape of price deflation. In our view, Suppliers have little option but to review promotion mix, frequency and discounts, to stem the profit leak to retailers, not receptive to price increases.
As a supplier, how have you responded and what are your priorities in dealing with the retail chains?
These are challenging times for suppliers, looking to balance Sales and Profit, in a retail environment where branded product ranging is decreasing. Good Systems and Processes for Sales and Promotion Management are essential, to optimize Sales and Profit while avoiding the risk of product deletion.

If you are stuck trying to achieve this objective, using disjointed spreadsheets, take a look at our affordable, user friendly, cloud based solution, that can be implemented in 4 to 6 weeks, at or to arrange a discussion and demo, to see how easy it can be to manage the complete Sales and Promotions process, contact us at

Contact Us

tpm360 – Your trade promotion guide
Enables you to focus on profitably growing your business, rather than your spreadsheet collection.

Regatta One, Business Centre
Ground Floor
2 Innovation Parkway
Birtinya, QLD, 4575, Australia
Locked Bag 5010, Caloundra D.C. QLD, 4551, Australia
Phone: +61 (7) 5405 9540
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Trade Promotions – Cause for concern

Take a look at Trade Promotions fast facts

  • Consumer goods businesses spend 15% to 30%
    of sales on Trade Promotions
  • 56% of promotions don’t produce any sales volume increase
  • 67% of promotions don’t break even
  • Trade spend increased 10.8%, while gross sales
    declined 3.7% (4yrs to 2013 – AFGC)

Brand owners are under constant pressure to price promote products, with retailer terms causing increased business risk.

tpm360 lets you restore balance with customers, enabling your business to focus on those customers, products and promotion events, that drive value – essential for sustainable business success.

Let tpm360 turn concern into confidence

What can tpm360 do for your business?

tpm360 is a highly accessible promotions management tool, for businesses grappling with disjointed spreadsheets and unwilling to take on, complex, resource taxing solutions.

tpm360 is Accessible in every sense:

Expect rapid results and ROI without resource drain


Sales budget

Your sales budget is your road map, to achieving acceptable business and profit growth, key drivers for business value growth.

  • tpm360 lets you prepare your sales budget, taking into account past performance, by customer, brand, product and territory.
  • Budget by sales volume and $ revenue, for normal and promotional sales.
  • With product costs linked to pricing, you have a real time view of
    • acceptable margin/profitability limits,
    • which customers are giving best value, relative to trading and promotion terms

Sales forecast

Once your sales and marketing budgets are approved, they are commitment against which actual performance is monitored.

  • For best practice planning and control, variances resulting from the dynamics of the trading and competitive environment, require updating of a rolling forecast, at least monthly.
  • Using Actual Sales data from your ERP system, or external retail scan data, your sales budget, commences your forecast.
  • tpm360 enables you to update your forecast, by proactively reviewing the affect of promotional changes, required to as far as possible, stay within budget.

Account managers can feel confident. All data is easily accessible for sales and promotions planning


ROI Assessment

The key to committing to promotions, is the ability to assess the Return on Investment (ROI) of potential promotions and ensuring they are within policy limits.

tpm360 lets you quickly:

  • Benchmark promotions history as a guide, for promotion type, discount and duration.
  • Assess Promotions ROI, with a view of Incremental Sales and Profit Contribution for planned promotions.
    • ROI view takes all trading terms and promotional rebates into account, to assist your pricing decision process.


Promotions Approval and Status Monitoring

  • Promotions approval alerts, ensure financial control of spending levels.
  • Once a promotion is created it’s status is monitored, through to closure.
  • Statuses can be set and colour coded for easy monitoring, within the promotions schedule and within the sales forecast.
Confidently Manage, Promotion ROI, Approval and Status


Rebate accruals

  • tpm360 Rebate accrual function, ensures you avoid the unpleasant surprise of finding out promotional costs have blown out, long after promotions ended and sales have been reported.
  • On creating a promotion, the forecast cost is known and on approval, ready for accrual by Finance, in the month product sales are made.
  • Promotion rebate accrual ensures proper margin reporting and control, pending receipt of customer claims.
  • Accruals can be updated as actual data becomes available, until customer claims are received and processed.

Actual ROI review

  • Actual promotions effectiveness and ROI can be assessed, when a promotion has ended.
  • Reviewing actual ROI is essential, with history updated for future forecasting and as a basis for claims validation.
  • tpm360 enables this process to be performed, using customer or purchased external scan data, or your own sales data.
Feel Confident, Always Knowing how Sales, Spending and Profitability are tracking


Performance analytics and reporting let you track sales, promotions,
spending and customer profitability to forecast, with multiple filter criteria.

Performance analytics

The tpm360 KPI dashboard ensures constant focus on key performance measures, by Account Manager, customer and brand, such as:

  • Promotional spend $ and % of sales, compared to budget and forecast
  • Sales – actual and forecast sales, compared to budget and last year
  • Gross profit %
  • Promotion effectiveness – incremental sales volume and profit
  • Promotions efficiency – promotions cost %

Plan review

Continuous performance tracking to budget and rolling forecast, may require review of your promotions plan.

  • tpm360 Performance analytics and reporting, allows you to easily home in on those areas of your plan that need review. Examples are :
    • Customer promotions not achieving forecast,
    • Correcting of overspending,
    • Adjust the promotions schedule, for changes to the marketing plan
    • Redeploy spending from one customer to another, delivering superior results.
    • The effect of reviewing plan inputs are immediately reflected in the sales forecast and promotions plan, as you commence the next cycle of Plan > Execute > Control > Review, a continuous process, to ensure you optimise promotions spending, sales and profitability.
Identify key trends and actions required, from KPI performance drivers and reports