2002 P-O-P Trends Report

Many are looking at the retail sector with a great deal of uncertainty following the terrorist attacks of Sept. 11 and continuing signs that the economy is headed for recession. As of this writing, many analysts are estimating grim sales numbers for the last quarter of 2001. Some experts, including Federal Reserve Board Chairman Alan Greenspan, are predicting that the economy could face one or possibly two quarters of negative growth in the coming year.That said, all but one of the companies contacted for this report predicted their P-O-P spending will at least hold steady in 2002. Some even indicated that they will be spending more on P-O-P in the coming year, though budgets were still being finalized as this report was being compiled. At the same time, marketers are forging ahead with new product introductions and in-store merchandising campaigns that they hope will renew consumers' buying habits. Most analysts agree the market exhibited definite signs of weakening over the summer months. Some have even speculated that the events of Sept. 11 simply brought that fact to the attention of consumers and in-vestors, and that the tragedy may have just sped up a decline that otherwise would have run its cycle over the course of a year or two.At press time, the federal government was executing plans to divert a full-fledged recession. Congress is preparing to counter economic woes with a $75 billion infusion package that reportedly could bolster economic growth by 1% to 1.5% over the next year. The Federal Reserve Board has responded by lowering short-term interest rates repeatedly since Sept. 11.Regardless of any initiatives by the government or the private sector to invigorate the economy, it ultimately comes down to the consumer. Consumer spending accounts for more than two-thirds of the nation's economic activity and the future of the U.S. economy is tied to consumer confidence."Consumers hold the key to the economic stability of the country," said Martin Regalia, chief economist for the U.S. Chamber of Commerce, in an Associated Press financial news article. "If consumers continue to lose confidence in the economy, and thus refuse to spend, the hopes of a quick rebound in economic growth look bleak. But if consumer confidence rights itself, growth could turn around swiftly."P-O-P to the RescueP-O-P may be required to pick up the slack as marketers reduce their spending on more expensive forms of media advertising. At press time, The Hollywood Reporter, a trade publication covering the television and entertainment industry, predicted that 2002 could see TV ad spending drop by as much as 4% over 2001. P-O-P, however, may not suffer comparable cutbacks because it's often perceived as one of the more economical vehicles for promotion."When comparing available elements of the marketing mix, such as media spending, displays are relatively inexpensive," says Steve Spetnagel, merchandising and equipment manager at Coca-Cola Co., Atlanta. "With more than 20 brands in our portfolio, display activity continues to be brisk. 2002 promises to be another exciting year for Coca-Cola and merchandising tools will continue to be actively used in support of our marketing efforts."At The Gillette Co. in Boston, Gino De Luca, director of permanent merchandising systems, is planning on a larger budget for 2002. "I'm asking for a bigger budget, 5% to 6% higher than this year," he says. "I'm sure that in the worst case it won't be lower than last year. It'll be the same and most likely higher."Gerard Gausselin, manager of merchandising innovation at Kellogg Co., Battle Creek, Mich., also plans to increase P-O-P support in the coming year. "We're currently spending more on P-O-P," he says. "I think that will continue. We're going full speed ahead. We're in an impulse business and P-O-P is very important to us."New York-based Revlon will be spending the next year developing new merchandising systems to expand its market reach. "I'm working on a system for new distribution channels," says Robert Werner, director of retail merchandising. "We've been putting out feelers and the feedback has been very good."Andrea Martin, category manager for marketing services for Modesto, Calif.-based E. & J. Gallo Winery, is preparing for several product launches. The company's new cognac and brandy brands, which had been in test, will be released nationally. "We plan to continue with our plans," Martin says. "We'll have more P-O-P, more products, and we'll be developing more tie-ins with brand partners."Phillip Morris USA, New York, will also be expanding its in-store programs. "We'll be working with retailers to come up with solutions at the point-of-sale," says Tom Ryan, a spokesman for the company. "We want to develop solutions that help retailers build their businesses, like category management programs." Ryan also says the company will continue to expand and distribute materials for its Youth Smoking Prevention program.Fellow tobacco company, Brown & Williamson Tobacco Corp., Louisville, Ky., will proceed with its in-store efforts in the coming year. This past year, the company introduced its "House of KOOL" branding campaign that included an array of permanent and temporary display pieces. "We'll continue to support that program over the coming year," says Steve Kottak, company spokes-man. "We want to reinforce our brand and continue to build the menthol cigarette category."In the competitive electronics arena, both Nintendo of America Inc. and Microsoft Corp. are preparing for massive merchandising campaigns in support of the GameCube and Xbox gaming systems, respectively. Both Redmond, Wash.-based companies are planning to hit the market with interactive demonstration units, as well as extensive merchandising support for software titles."The entire Toys 'R' Us chain is already installed and ready for product and we don't even come out for another month," says Bill Brownell, group marketing manager for Xbox, speaking prior to the Nov. 15 release date. "That is the kind of excitement and support that we're getting from retailers."Brownell says that retailers were willing to put up display materials over a year ago to announce that the new gaming system was coming and that enthusiasm hasn't faded. "We sent out a counter card that the retailers put up long before they started pre-selling the product. That card is still in many stores."George Harrison, senior vice president of marketing and corporate communications for Nintendo, is also moving ahead with ambitious merchandising plans for the coming year. "We're going to have 10,000 interactive units in stores by Thanksgiving," he says. "We have a variety of interactive displays. We have some floorstands and counter displays that can be customized."During the next year, Harrison says the company will continue to expand the GameCube gaming platform into smaller retailers, while also providing P-O-P and promotional support for high-profile gaming titles. The company will also be adding further support for its Game-Boy Advance platform, which debuted last spring."The biggest challenge for us next year, as our software library expands, is to make sure there is adequate space and presentation in stores," says Harrison. "In any given quarter, we will have point-of-purchase support for four titles for Game Boy Advance and three to four for GameCube."Retailer RestrictionsThe only company contacted for this article that indicated it might not match 2002 P-O-P spending figures was Levi Strauss & Co. However, that has nothing to do with the current economic situation and everything to do with retailer restrictions. "I think that we'll probably do less P-O-P next year because I'm noticing that retailers are stepping back from the amount of signage that we can put up in a store," says Chris DeNovi, retail marketing manager for the San Francisco-based company. "Moving forward, we're going to have to make a bigger splash in a smaller space."That doesn't mean that DeNovi will be giving up on trying to secure floorspace at retail. It does mean, however, that the company may have to change its approach to merchandising as it did this past fall with its back-to-school promotion in Goody's department stores. To try to hold valuable up-front placement in stores, DeNovi designed a merchandising program that piggybacked two programs. Both programs used the same standee to grab consumer attention. The standee was a six-foot corrugated piece that featured a girl twirling a hula-hoop. The first program offered consumers a chance to win a free family vacation. It was supported by a 22-inch by 28-inch poster mounted to the standee. The poster was two-sided so when it was time to switch to a CD gift- with-purchase promotion, the sign simply had to be turned."We saved a ton of money because we used one big standee for the entire month and all we had to do was change out the poster," says DeNovi. "One poster. Two promotions."DeNovi admits that he wasn't sure if Goody's would allow him such a large amount of space for such a long time, but they were swayed by the added value of the piece. "They agreed that it was so impactful and made such a splash that they really felt it added excitement to their back-to-school season," he says. "They also really liked the idea of making it easy for their sales associates since they didn't have to change a lot of things."Adding Value at RetailRegardless of market trends and economic forces, there is little chance that the retail landscape will become less competitive. As a result, marketers will continue to be pressed for retail solutions in the coming year. Value-added merchandising and customization options will be key to getting displays placed with retailers, according to those interviewed for this report.Kellogg's Gausselin says that he plans to address this retail need by offering retail category management solutions. He is currently developing two systems to help retailers organize their aisles. The first is for the company's Pop-Tarts line, which will be similar to what Procter & Gamble did for its Pringles brand, he says. The second system will attempt to help retailers organize their cereal aisles."If you look at the cereal aisle in the morning, it's pretty nicely organized. But by four o'clock in the afternoon, it's a mess," says Gausselin. "People have been shopping it and it's tough for the store to keep up with restocking and refacing. We want to help our customers organize an aisle or a section of an aisle to keep it clean and to make it easier to shop. Obviously, we also want to create some equity strength for our brands through signage."Revlon's Werner agrees that marketers are going to have to start offering retailers more than a simple display or branding campaign. "Retailers need systems of merchandising that are easy to implement and restock," he says. "Also, they need help with inventory control. As far as consumers are concerned, they need merchandising systems that are easy to shop."At Gillette, more than half of De Luca's budget is now spent on customizing displays and he says that trend shows no signs of stopping. "In the past, when we launched a national program, we built two displays and all of the accounts used those," he says. "Now, they want something unique to their store or chain. The purchase of standard displays is on the decrease and the desire to customize displays is on the rise."E. & J. Gallo's Martin says that she will continue to pursue relationships with food manufacturers and licensed properties to try to offer retailers a higher ring. The company regularly partners with food brands to cross-merchandise wines. According to Gallo, that offers retailers a greater incentive to place the displays."Our point-of-sale is geared to show people enjoying food and wine in a celebratory atmo-sphere," says Martin. "Cross-merchandising is a big thing for us and it will be a big focus in the coming year."Tricia Bowles, manager of public relations for Nestl» Confections, also has plans to partner with other licensed properties to increase the appeal of Nestl» displays. Next year, the Glendale, Calif.-based company will be working with Disney to incorporate its characters into P-O-P. For Valentine's Day, Nestl» will feature Disney couples on its display materials. During Easter, the displays will showcase Winnie the Pooh. Mickey Mouse will be presented on the company's holiday pieces."I think retailers are really starting to see the value they get when these merchandising units are able to stop traffic," says Bowles.Though the current economic situation may for the moment appear uncertain, marketers are betting that consumers won't stay away from stores for long. And when they get there, they'll be greeted by an array of P-O-P displays. A full economic recovery might be only a shopping trip away and consumer spending could be the ultimate form of patriotism. This may be P-O-P's finest hour.

P2PI MEMBERS

JOIN P2PI

You May Also Like

AD Retail Media’s Transition In-House

Hall of Fame Profile: Stephen Bettencourt