IGA Tasmania Price Match Program. Retailer Overview. 12 August 2015

Transcription

1 IGA Tasmania Price Match Program Retailer Overview 12 August 2015

2 Key Program Information Project Name: IGA Price Match Program Program Reference: IGA National Price Match Program / Project Diamond TIR Key Departments: External Stakeholders: Supportive Documents: Retail Opps & Development, Marketing & Merchandising, Advertising & Production SIW, MFG, Suppliers, IGA TAS Retailers, Other Parties Price Match Program Reference Basket & Supportive Documentation MFG Supportive Documentation Retailer Communications Program Start Date: Wednesday 02 September 2015 Key Issues: Attachments Project Diamond Price Match Program / Overview Consumer Price Perceptions Price Match Reference Baskets Retailer Compliance Retailer Margin Hosting Price File Structure / Retail Pricing Hosting Wholesale Prices ex SIW In store Shelf Management (RSP s) Price Match SKU s & RSP Comp Checks Marketing & Advertising Program Benefits Retailer FAQ Program Terms & Conditions (Consumer) Price Match POS Material IGA TASA Value Message Retailer Communication & Sessions Key Contacts & Queries Reference Basket # 01 SKU Details Program Terms & Conditions

3 Project Diamond What is Project Diamond and Its Key Platforms?

4 Price Match Program What is Price Match and how does it work? The Price Match program has been successfully trialled in selected mainland IGA stores over the past 12 months with the program being officially launched via a national media campaign on Sunday 14 June The Price Match program (competitive pricing) is one of the key elements & platform of Program Diamond which also includes; Shopper Led Range / Retail Excellence / Compelling Fresh Offer and Network Investment. The program is premised around price matching the everyday RSP for key / signalling SKU s in IGA stores to that of WOW & Coles. For many years independent consumer research has delivered the same findings, in that whilst consumers value the brand, the convenience and the strong local support that IGA delivers, they view our network as being expensive from an everyday sell perspective relative to our competitors thus driving them more towards our competitors from a full shop perspective and leaving our stores more with the convenience spend of the market. The mainland program, whilst consistent from a corporate messaging perspective, does vary from both an interstate and intrastate perspective with regards to the various reference baskets and SKU s. At present there are three main reference baskets that apply, those being, a large reference basket of 2200 SKU s / a mid-range reference basket of 1850 SKU s and a small reference basket of 950 SKU s. The mainland program is mandatory for CH1 and CH2 (albeit not all CH2 retailers are participating in the program yet) and is not available to CH3 stores. TIR has been undertaking a detailed review and modelling of this program for the past 6-9 months and is now in a position where it feels a similar, and affordable program that will deliver the same benefits and outcomes as the mainland equivalent, can be rolled out to IGA TAS retailers. The Price Match Program has now also been formally endorsed by the TIR Board of Directors. Further details on the program are noted in this document. Note - For clarification purposes Channel 1 relates Supa IGA (CH1), Channel 2 relates to IGA Everyday (CH2) and Channel 3 relates IGA X-press (CH3).

5 What do Consumers Really Think when it comes to Everyday Price Points and Price Perception? Independent Market Research (Lattitude) Base: Wave 2 (n=19,118). From the list below, if you had the chance to tell the store manager up to 3 things that they should improve to make you more likely to shop here more often, what would they be? (Please rank your top 3 in order from the list below) Prices Range of products Stock availability Quality of fresh Speed at checkout 15% 31% 24% 23% 43% Store environment Staff helpfulness / friendliness Trolleys 10% 8% 7% Wave2

6 Price Match Reference Baskets (RB) What are the Price Match Reference Baskets (RB)? At present we are working on two Price Match RB as follows; Reference Basket # 1 this is largely based on the IGA South Australian (SA) reference basket and has been further expanded to ensure, where possible, that all key categories are included in the program. This RB currently contains 900 SKU s Approx. Details of the reference basket are attached. Reference Basket # 2 this basket currently consist of 2200 SKU s that are already priced matched or cheaper than the WOW equivalent based on a PF01 or PF1 structure. RSP s for SKU s that are lower than the current WOW RSP will be increased progressively over the coming weeks / months in some cases the increases are quite significant. Where increases are applicable TIR will apply the same RSP across all IGA hosted prices files. This will be referenced to as our secondary price match reference basket and will not attract any in store POS. Note in both instances there are currently no Private Label SKU s included in either RB. Retailer Compliance Will the program be mandatory across all IGA channels or run it on an opt in basis? From a mainland (IGA / MFG) perspective the program is mandatory for CH1 & CH2 and not extended to CH3. TIR s position at this point is the program will be mandatory for all CH1 Retailers and will be optional (Opt In) for all CH2 & CH3 retailers. This position may change where there is a clear 2/3 majority of retailers participating in the program in either the CH2 or CH3 structure. TIR notes the program is mandatory from an IGA mainland perspective for all CH2 retailers however at this point not all retailers in this Channel are participating. If this position changes, or conversely IGA National / Metcash (MFG) seeks to impose the same conditions for Tasmanian IGA Retailers, then TIR will have to reconsider the opt in provision for CH2 retailers as it currently stands. Retailer Margin On what basis will the Retailer Margin for all Price Match SKU s be determined? As advised in prior communications TIR has for the past 6 months been modelling different options with regards to the lower retail price points required and the corresponding implications with regards to retailer GP / margin. From the outset TIR has been conscious of the need to maintain retailer GP (both GP% and GP Bankable $$$) for all SKU s that fall within the Price Match Program and hence the Tasmanian version of this program has in the main been premised on these principles. As part of this endeavour TIR confirms that Retailer GP Bankable $$$, based on the current PF2 price structure, for all selected SKU s that fall within the Price Match Program (RB # 1) will be maintained. TIR has opted to maintain GP bankable $$$ based on PF2 as the vast majority of IGA TAS Retailers fall under this price file structure, or the more competitively priced PF1 (53/85 IGA retailers Approx.). As a result of this decision any retailers that currently fall under a PF1 price file structure will obtain a small increase in GP Bankable $$$ along with a corresponding increase in GP % (per unit sold). In contrast all IGA retailers that fall under the current PF2 price file structure (on which the price match subsidy and GP Bankable $$$ has been determined) will maintain their current GP Bankable $$$ but will still obtain a corresponding slight increase in GP% (per unit sold). Retailers that fall under the

7 current PF3 price file structure may in some instances notice a slight reduction in GP Bankable $$$ however any impact will minimal, and should in the main be offset via increased unit sales and corresponding net bankable GP $$$. Details of the initial Price Match Reference Basket (RB # 1) is attached to this advice please note the final SKU s to be included in this program, along with pricing and other details may vary slightly from that noted on the attached list. General notes with regards to the attached information includes; WSL this is the current SIW price excluding SIW fees LISC this is the suggested LISC based on PF2 which allows for SIW fees of 4.00% for ambient and 7.00% for perishable Retail PF2 this is the current retail price based on PF2 Margin % PF2 - this is the current GP% based on PF2 (note this allows the imposition of the SIW fees as noted above) Margin $ PF2 this is the current GP Bankable $$$ based on PF2 WOW Retail this is the WOW equivalent RSP that we need to attain for the SKU to be part of the Price Match Program Margin % Revised this is the revised GP% that will apply under the Price Match Program In summary GP Bankable $$$ are being maintained based on PF2, and, GP % will in most instances be higher than current, also based on PF2 Hosting Price File Structure / Retail Pricing What amendments / changes are required to TIR s current hosted price file (PF) structure? Some amendments and changes to the current Price File (PF) structure are required to accommodate the Price Match Program. These amendments are premised on maintaining flexibility within the price file structure that will allow IGA TAS retailers to participate in the price match program whilst also allowing them to maintain their current retail pricing for all non price SKU s as per the current price file options of PF1, PF2 & PF3. Currently TIR host the following Price Files (PF); PF00 PF01 PF1 PF2 PF3 PF4 PF5 WOW Comp File 1 IGA Retailer (WOW Combat Price File) 13 IGA Retailers 39 IGA Retailers 23 IGA Retailers 8 IGA Retailers 0 IGA Retailers Under the Price Match program the following changes to the price file structure will apply; PF01 will revert back to base PF1 retail pricing for all SKU s with the exception of those SKU s that fall under the price match program. Two additional new price files will be created, those being PF02 and PF03. They will operate on the same basis as PF01 only the nonprice match SKU s will be linked back to the current retail prices as per PF2 & PF3.

8 Given the increased number of price files, and the very small difference in the everyday retail prices as hosted under PF4, this price file will be deleted with all retailers being allocated to the PF3 tier. TIR will consult separately with the 8 IGA retailers that are affected by this decision. In summary PF1, PF2 & PF3 will be maintained as per the current arrangements for all non-price match stores with three new price files being developed, those being PF01, PF02 & PF03, for all stores participating price match stores. PF01, PF02 & PF03 will replicate the current retail pricing as per PF1, PF2 & PF3 for all non-price match SKU s with the price match SKU s having the same retail price applied across all 3 new price files. Given the above the revised hosted Price File Structure will be as follows; WOW Comp Check Price Match Non Price Match (IGA) Non Price Match (Non IGA) PO00 PF01 / PF02 / PF03 PF1 / PF2 / PF3 PF5 Note the WOW Comp Check PF (PF00) and PF5 are not available to IGA Tas retailers. Hosting Wholesale Prices ex SIW How will TIR facilitate the program wholesale pricing to retailer ex SIW and DSD? All wholesale and retail prices that apply to the Price Match SKU s will be hosted to retailers each week at the correct / lower prices (wholesale and retail) as applicable and not as specials. In summary the in store POS system, along with the yellow everyday shelf ticket will reflect the lower prices with the SKU being highlighted in store as a Price Match SKU via generic Price Match ticketing. Given the Price Match program is predominantly funded via the supplier promotional case deal ex SIW, the lower wholesale price, will in most instances, also be comparable to the special wholesale price that will be hosted separately via your POS promotions record. In some instances however an additional / top up case deal will be required by TIR to meet the everyday RSP required and the corresponding GP bankable $$$ targets. Where this applies the correct / lower wholesale price will be hosted (as noted above) however the actual invoice charge ex SIW will be at the higher or in some instances the normal SIW wholesale price this problem arises given TIR s endeavour to ensure that only those stores participating in the price match program receive the additional / top case and funding support. Where this issue occurs TIR will, at the conclusion of each week generate a store specific report noting all details relevant to the additional / top up case deals applicable and will process the net equivalent credit due to each store via their TIR charge through account the following week. A copy of the report noting the full credit details will accompany each TIR credit. TIR accepts this is not an ideal solution however this issue will only be resolved if, and when the program becomes mandatory across all IGA Channels in Tasmania. DSD Pricing where applicable this will be facilitated via the respective DSD vendor however there will be limited instances where an additional / top up case deal will be required by TIR. If this was to apply however, the participating IGA TAS retailer would be charged the lower wholesale price and TIR would be invoiced for the net subsidy cost.

9 In Store Shelf Management How will the lower RSP be conveyed to the Consumer? TIR will run the program under an ALT Wholesale arrangement via SIW this will ensure the correct RSP s are hosted to participating IGA TAS retailers (as noted above). From a shelf management perspective the yellow / everyday RSP ticket will also be representative of the lower RSP. To promote the program in store TIR will provide 9 up shelf talkers that will be positioned in front of each participating SKU in the same manner as that used for weekly specials. The 9 up shelf talker will contain the relevant item and price details and will be positioned over the yellow / everyday ticket (which will also note the same retail price). Where the SKU is on promotion a special 9 up ticket will be provided which will overlay the price match 9 up ticket, which will be removed at the conclusion of the weekly special the challenge or your staff in this instance will be to only remove the weekly special 9 up and not both. Amendments to the price match reference basket will be advised to retailers via the weekly host, the weekly news bulletin and corresponding new in store POS. The written advice will take the form of; 1) New SKU s In this will include 9 up shelf ticket along with a new yellow shelf ticket generated via the host (where the price varies) 2) SKU s Out this will be a list of all SKU s to be removed from the price match reference basket. In this instance the 9 up shelf ticket will be removed. 3) SKU RSP Changes Any price adjustments will be generated automatically via the weekly host and the generation of a new yellow / everyday sell RSP and corresponding 9 up shelf talker will apply. Dependent on the RSP price movement in WOW / Coles, a SKU may be removed from the program. TIR is considering options for the 9 up shelf talker to be laminated (or similar) as it is most likely the SKU will remain in the price match program / reference basket for some time. This will add some minor cost to the program from TIR s perspective however it will present better and certainly last far longer in store. It may also act as a flag for staff not to remove the price match 9 up shelf talker as part of the weekly promotion changeover. In addition to the above TIR will endeavour to work with the various POS providers on identifying the SKU s that fall into the price match reference basket via your back office system. This will require some additional work and testing with the various POS providers and is unlikely to be in place prior to the program launch on Wednesday 02 September In lieu, and until the POS changes are made, TIR will in addition to the above provide participating retailers with a hard and soft copy of all SKU details that fall under the Price Match Program. Note it will be a mandatory requirement that all participating retailers ensure that all SKU s that fall under the Price Match Program are highlighted in store POS with the relevant POS as provided and maintained at the hosted price. The only time this requirement will not apply is when the price match SKU s are promoted via our normal weekly item & price program at a lower retail price point in this instance the price match shelf talker will be overlayed with the weekly special shelf talker. At the conclusion of the weekly promotion, the price match shelf talker must remain.

10 Price Match SKU s / RSP Comp Checks How will TIR ensure the RSP s for the products that fall under price match program are consistent with the everyday sell for WOW and Coles? TIR currently comp checks WOW over a 6 week period with all prices being hosted via TIR s PF00 price file. Irrespective of this however, and as per the program terms and conditions TIR will now price check all Price Match SKU s each week via Woolworths & Coles Kings Meadows (in Launceston). Marketing & Advertising Will TIR promote both below and above the line? For clarification purposes below the line refer to instore / local area marketing of the program whereas above the line promotes the program via statewide press, TVC and other mediums. Social media and digital will fall under the category of below the line advertising as we can specifically target the messaging and promote the participating stores in the programs. At this stage it has been resolved the Price Program will only be promoted below the line with a further review pending retailer participation in the program. Program Terms & Conditon What are the Program Terms & Conditions? The program terms and conditions are mirrored from those used by Metcash for all participating IGA stores and will be customized slightly to reflect the revised arrangements in Tasmania. A copy of the program T&C s are attached for your reference. Program Benefits Retailers & TIR What are the benefits and up-side to both TIR & our IGA TAS Retailer participation in the program? The key benefits for both TIR and our IGA Retailer network includes; 1) Full tie in with the National IGA program and full compliance to TIR s obligations as per its IGA Licence Agreement with MFG 2) We deal in part with the value messaging issues around everyday pricing on key SKU s 3) It will help drive sales and additional volume thus delivering greater efficiencies and potential cost of service reductions for supply via SIW 4) The program has been premised on an opt in basis for all IGA TAS retailers bar CH1 5) GP Bankable $$$ (based on a PF2 price file structure) has been maintained In summary, high and unrealistic everyday RSP s on key SKU s has been our Achilles Heel for many years, this program will go a long way to resolving this issue and will better complement our already strong item & price promotional program thus further enhancing the value proposition when shopping IGA / Independent.

11 Retailer FAQ Retailer Frequently Answered Questions (FAQ) 1) What is Price Match? Price Match is about lowering the everyday sell price of selected SKU s to match those of WOW and Coles. 2) Why Do It? The main focus of the Price Match Program is to help drive the everyday retail price value message. Consumers are constantly telling us that we are expensive with recent research indicating that 43% place everyday price as being one of the key issues with regards to where they shop and whether they will buy more. In addition, competitive pricing ranked top across different store format of full line, medium and small. In summary our value messaging via our weekly promotional price program is strong, coupled with our in store LDLP program, however our everyday retail price perception is much weaker. 3) Do I have to participate in the program? The program is mandatory for CH1 retailers and optional for CH2 & CH3 retailers. TIR may consider making the program mandatory for CH2 & CH3 where there is a 2/3 majority participation in the program. Conversely Metcash may impose the mandatory requirement with regards to CH2 only. 4) How Many SKU s will fall into the initial Reference Basket? The first RB will consist of Approx. 900 Proprietary Branded SKU s. 5) What impact will the program have on my GP Bankable $$$ and GP%? The program has been premised on maintaining retailer GP bankable $$$ based on the current PF2 pricing arrangements. 6) Will the Reference Basket (RB) vary from time to time? Yes. The RB will vary dependent on the retail prices set by WOW and Coles, TIR s ability to meet and revised RSP s of WOW and Coles and the level of TIR additional subsidy required. 7) How will I be notified of any Changes? TIR will forward a report each week which will provide an updated list of all SKU s in the Price Match Reference Basket along with any weekly movements, i.e. Ins and Out s 8) Will there be any changes to the current hosted price file structure? Yes. The revised price file structure will see the PF4 removed with IGA retailers reallocated to PF3. In addition 3 new price files will be introduced, those being PF01 / PF02 / PF03 these price file will maintain the current RSP for all non-price match SKU s and will apply the same RSP across all 3 price files relevant to the price match SKU s / RSP s. 9) How will the Wholesale and Retail Prices be hosted? The lower wholesale price, inclusive of SIW Fees, along with the lower everyday RSP will be hosted to retailers weekly as per the current hosting arrangements. In many instances the lower Wholesale Price will equate to the promotional wholesale price which will be hosted, and shown separately via a promotion records within your POS system. In some instances an additional / top up case will apply in these cases the lower wholesale price will be hosted however your corresponding wholesale price as charged ex SIW will be higher, where this is the case a separate manual credit will be processed via TIR at the conclusion of each week. This report will note all details relevant to the manual credit. 10) How is the Program Funded? The program is predominantly funded via the supplier promotional case deal and corresponding promotional buy period and overlaps ex SIW. In some instances additional / top up case deals will be required from TIR these will be processed via a manual credit as noted earlier. 11) How will the program be promoted? The Price Match program will be promoted via in store POS and local area marketing initiatives only at this point (this is what we refer to as below the line ). TIR will only consider above the line advertising (TV, Press and other mediums) when and if the program becomes mandatory for CH2 retailers. 12) What POS will I receive? A POS kit, along with other supportive documentation will be forwarded to all participating retailers prior to the program start date or post where applicable. In summary the POS kits and options will include; standees, window posters, T&C s, in store POS (staff room), 9 up s, promotion blades and hanging POS. 13) What details will be included on the 9 up shelf talker? The 9 up shelf talker will contain item and price details relevant to the participating SKU and will be positioned in front of the yellow shelf ticket (which will also note the same everyday sell). TIR will host new 9 up shelf tickets if and when the product details or retail price changes. Special tickets will need to be placed over the price match 9 up ticket when applicable the key challenge for your staff is not to remove to the price match 9 up ticket at the conclusion of the weekly special. 14) Will this program impact on any other TIR support, advertising or rebate programs? No. All current programs will be maintained. 15) Will LDP be maintained? Yes. The LDLP program is important part of our value messaging and offer and hence will be maintained as per the current arrangements. 16) Is there any need for me to continue to run lead in s and lead out s? The simple answer is NO albeit you can if you so choose. The Price Match Program in effect lowers the everyday RSP to meet that of WOW and Coles hence there is no need to run over and above activity such as lead in and lead outs.

12 Price Match POS Material What POS will be provided to participating retailers? A base POS kit will be provided to all retailers participating in the price match program. Final details are yet to be confirmed but at this stage will include; Standee Aisle Posters Blades Product blades T&C s Counter Staff Posters (for staff room) A separate in store POS execution guideline document will be issued to all participating retailers. Please note all POS linked to LDLP and Favourite Brands needs to be removed as part of this process (Note TIR will maintain LDLP as one our value message platforms as will be the case for all mainland IGA retailers). TIR Opps Staff will liaise with all retailers on this requirement.

13 IGA TAS Value Messaging Weekly Specials LDLP Price Match

14 Retailer Communication & Sessions How will TIR communicate the program to IGA Retailers in TAS? Key dates moving forwards include; Wednesday 12/08/2015 Initial communication to all IGA Retailers via Wednesday 19/08/2015 Retailer Information Session, Launceston, (Venue / Time TBA) subject to numbers Thursday 03/09/2015 Program start date Key Contacts / Queries How to Contacts re Questions / Queries or Participation in the Price Match Program. All s queries, question, or request for store participation to be involved in the IGA TAS Price Match Program should be directed to; pricematch@igatas.com.au All other queries should be directed to your Retail Opps Consultant or conversely Ron Barker or Grant TIR. Grant Hinchcliffe / Ron Barker / Todd Johnston / Robbie Berne / Michael Betts / Craig Smith /