the better retailing blog
Grabbags at 2-for-£1: who wins?
by Nick Shanagher on 29 January, 2010
Walkers Max are promoting their grab bags with a 2-for-£1 flash in corner shops, and I wonder how many retailers have done the maths? My local Best-One is selling these singly at 55p, and if he is buying from Bestway he is making a 16p net margin on every bag he sells.
However, if he sells two bags together, he makes a net margin of 23p – and his profit on return has fallen from 34% to 27.4%.
On the Booker website it lists both the pricemarked 2-for-£1 and the standard 50g products. The recommended retail price for the promotional packs is 57p and for the standard pack is 54p. In the absence of any commentary about possible overriders that are available to local retailers, it does not seem to make much sense to take part in this promotion. Perhaps someone could let me know how it could?
Comments (5)
I have grabbed this oppertunity to increase the price of a single bag to 60p and thus increasing my margin and also giving my customers value with the 2 for £1.00 offer. I am noticing customers buying two packs instead of one as the offer is on the pack and much more convincing.
If you are buying a case at £9.89 (the Bestway price) this means you will make £6.45 profit on return for every 32 packs you sell as singles but only £3.73 if you sell 16 two-for-one offers. In order to get to the same profit level if every customer takes advantage of the offer, you need to sell 24 extra packs, which is a volume sales increase of around 75%.
Of course, the reality is somewhere between the two points and you may be judging 3p extra profit per customer visit as attractive! Abdul, it would be great to hear in a week’s time how successful the promotion has been for you.
I deal with a small wholesaler who’s a member of Sugro we have dealt with this firm for over 20 years and have found the service, credit terms and price very good.
We have ran this deal and have found it very good and profitable too. Just checked my invoice and we are buying in the Walkers Big Eats @ £7.87, case size 30 i thus cost 31p. Happy retailer and customers HERE!
The verdict appears to be that the retailer and shopper win. I am still concerned that you have not done the maths but thank you for the feedback.
we have seen that we have sold alot more with the price marked packs.