Innovation has the power to drive value in the grocery industry and offset the value given away on promotions, according to Irwin Lee, vice president and managing director UK & Ireland at P&G.
Lee told delegates at the 2013 IGD Convention how P&G has created category growth in household products through innovation, developed an omni-channel strategy and harnessed multi-media and big data to boost sales.
However, he slammed the amount of non-P&G promotional activity in the marketplace.
“The one stat that keeps me awake is the amount of value given away by ever deepening promotional offers,” he said.
According to Lee, the amount of value given away on promotions has increased from 23% five years ago to 33% today.
Lee showcased how P&G aims to add “meaningful value” to businesses through innovation.
Its Febreze brand, which eliminates bad odour molecules rather than masking them, has helped create a £400m air freshener category. New car fresheners have driven penetration by 25% and spend by 50%, selling 1m in the last two months alone.
In laundry care, P&G has sold 13m new Ariel three-in-one pods since July despite their highest cost price per wash, said Lee.
A new liquid gel Flash product has created 7% growth in a flat category and created environmental efficiencies with its double strength formula and new pack design, using 45% less packaging and 65% less water.
“We are committed to sustain innovation to drive more category value growth,” said Lee.
P&G is adopting an omni-channel strategy and Lee revealed how the company has driven penetration of its Oral B brand in brushes and toothpaste with an out of season campaign combining store-based and online activity. It included bespoke retailer plans, e-commerce plans across retailer websites, social media and ads on Amazon’s Kindle tablet.
According to Lee, it fueled double digit growth in a category which typically flatlined until the Christmas rush.
Lee said P&G was also learning from news media and had created a Tide news desk in the US, building the brand in real time by channeling media experts, social media and advertising. “The newsroom mentality harnesses the power of multi-media at our disposal and stimulates conversations about our brands,” said Lee.
Acting on real time events and information is now key and the challenge is to turn big data into smart data, said Lee.
P&G can now model store shelves in real time and get shoppers’ views and is running joint working sessions with retail partners to win better insights on key performance areas.
These include promotional efficiencies from understanding the conditions that create spikes and slumps in demand.
“We need to learn and identify what low ROI events not to repeat and what high ROI events to do,” said Lee.
In one retailer example, this process has smoothed volume volatility and increased total category sales as a result.
Lee said P&G was excited by the new tools available and on “working together to better exploit data technology to generate better plans and sales and more sustainable business models”.