PL Magazine March 2022

Private Label Magazine Sustainability in PLs: raw materials, emissions and community, the must-haves for brands Cost-effectiveness and ecology in Crai’s shopping cart Icefor: sustainability is our added value 2/2022

TABLE OF CONTENTS - PLM

4

12

22

26

34

38

3

Editorial The PL gets more and more ‘personal’

4

Analysis Plef: sustainability and private labels in distribution

12 Cover Sustainability in PLs: raw materials, emissions and community, the must-haves for brands

22 Interview with distribution Cost-effectiveness and ecology in Crai’s shopping cart 26 The private label scenario The inflation challenge

Editorial director Maria Teresa Manuelli

Translation Jcs - Language Services info@jcslanguage.it

44 QBerg Observatory Face Cream: 2021 between promotional flyers and e-commerce

34 Interview with the company Icefor: sustainability is our added value

PLMagazine Quarterly supplement of Distribuzione Moderna magazine, a media outlet registered with the Court of Milan Registration No. 52 of 30 January 2007 Editor-in-chief Armando Brescia

38 Markets PL Cosmetics booming again

Scientific Committee Stefano Ghetti, managing partner Expertise on Field/partner IPLC Italy Gianmaria Marzoli, retail solutions vice president IRI Italia Alberto Miraglia, general manager Retail Institute Italy Paolo Palomba, managing partner Expertise on Field/partner IPLC Italy Emanuele Plata, co-founder, past president, board advisor PLEF Contributing Authors Federica Bartoli, Stefania Colasuono, Maria Teresa Giannini, Fabio Massi, Malachy O'Connor, Fabrizio Pavone, Luca Salomone

Creative Director Silvia Ballarin Editor Edizioni DM Srl - Via A. Costa 2 20131 Milano P. Iva 08954140961 Contact Phone 02/20480344 redazionedm@edizionidm.it Advertising Sales office: commerciale@edizionidm.it Tel: 02/20480344

There is no guarantee that we will publish the original versions or any part of submissions (texts, articles, news, images, data, charts, research, etc.) sent by authors outside the Editorial Board. Submissions may, however, be published in a revised form for editorial reasons. It should also be noted that sending a submission constitutes an automatic authorisation by Edizioni DM Srl to publish it free of charge in all its publications.

EDITORIAL - PLM

The PL gets more and more "PERSONAL" Brands are increasingly focusing on non-food products and especially on those for personal care. Besides detergents, sanitizers and disinfectants, also due to the pandemic, actual lines aimed at consumer’s general wellbeing with particular attention to sustainability.

This is the case with the giant Amazon, which is now launching a new line of sustainable products, ‘Amazon Aware’. With home, beauty and clothing items, the line boasts references ranging from facial tissues, to toilet paper, to sheets, and can be found on the dedicated Amazon Aware page. U.S.-based Target has also announced the launch of its Target Zero collection of sustainable products in the beauty, personal care and home care segments.

The products will be under the icon ‘Target Zero’ and will include new, as well as, already existing references meeting the brand's sustainable requirements.The online retailer Grove Collaborative has introduced a new line of skincare products called Superbloom. The new brand was created with the latest botanical science and ‘clean’ ingredients. With 100% vegan formulas, in fact, the references meet the company's sustainable, ethically and cruelty-free product standards.But the consumer focus spans broader areas. Walmart has even unveiled two new spring clothing collections by designer Brandon Maxwell: ‘Free Assembly’ and ‘Scoop’. Maxwell has been the creator of Walmart's private label fashion lines for a year now, and the new Free Assembly collection will include over 450 items. They will be sold in 1,000 Walmart stores nationwide. Maxwell's designs have been worn by Lady Gaga, Oprah Winfrey, Michelle Obama and Nicole Kidman. Wielding their all-round expertise on sustainability and consumer knowledge, PLs can become promoters of a truly holistic vision of wellbeing, a concept that embraces the entire assortment and different product categories. No longer just a strategy to build customer loyalty, today, PLs are a tool to prove that we’re meeting their needs. We will be talking about it at the conference ‘Well-being and sustainability, the private label becomes a protagonist’, on 13 April in Bologna during the Marca trade fair. The event will also be broadcast in streaming.

See you at the fair and online!

Maria Teresa Manuelli Editorial director

PLM - ANALYSIS

PLEF: SUSTAINABILITY

and private labels IN DISTRIBUTION Plef-Planet Life Economy Foundation, a non-profit association that has made the principles of Sustainable Development viable in market culture since 2003, analyzes the evolution of PL in this area.

S

ustainability is short for a context where environmental, social and economic constraints are considered simultaneously and as a whole in order to make decisions, act, define organizational models, processes, products and eventually strategies, or better yet, strategic positioning. Taking into account the above constraints, sustainability is a long-lasting model of value and wellbeing. In light of the above, an analysis on the relationship between largescale distribution PLs and sustainability seems impossible, as PLs of distribution brands are a potential consequence of strategic brand positioning.

Rather, there is a need to speak about sustainable strategic positioning of retail brands and the role of private labels.

SUSTAINABILIT Y, NOT TO EXIT THE MARKET This means that, today, distribution companies that haven’t reconsidered their strategic positioning are about to exit the market or risk being called out for greenwashing. In fact, in a scenario of ecological and digital transition with the UN 2030 goals, the European and Italian targets signed in Paris in 2015 and then turned into the RRP to be achieved by 2026, the advent of taxonomy for the recognition of environmentally and socially responsible investments, and the introduction of a non-financial reporting obligation in the environmental, social and governance fields, reconsideration is somehow inevitable. Today, with the constitutional introduction of environmental, social and intergenerational obligation, greenwashing is no longer just a matter of advertising but also of ordinary justice, as well as a reason for claims of unconstitutionality.

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ANALYSIS - PLM

5

HAI MAI VIAGGIATO CON IL PALATO?

Con Piaceri Italiani puoi farlo ogni giorno, senza muoverti da tavola.

Una grande selezione. Una grande attenzione ad ogni passaggio della filiera. Un grande rispetto delle tradizioni culinarie più autentiche. Un grande impegno per offrirti sempre il meglio. Dalla pasta alla mozzarella di bufala DOP, dalla marmellata al caffè, dalla salsa di pomodoro ai biscotti fatti come una volta, oggi puoi ritrovare il piacere di scoprire tutte le prelibatezze del Bel Paese stando seduto a tavola.

LA TRADIZIONE HA SEMPRE RAGIONE.

ANALYSIS - PLM

TACTICAL OR STRATEGIC POSITIONING? Therefore, the first thing to consider is whether a distribution company is greenwashing, in other words, promoting the social and/or environmental virtues of its own PL products as a tactical offer or, on the contrary, as an offer in line with its stated purpose and with its strategic positioning. The evolution of retail favors this consistent behavior because, at the beginning of the so-called modern distribution, the reasoning was "buy well and sell better" and retail brandsauthentic "me-too" of leading brands - allowed them to lower prices. And when discounters arrived, positioned on the industrialization of low prices, large-scale distribution realized that, to stand out, it needed a retail brand, immediately grasping that among its tools, the private label was the most suitable for this purpose. Since then, retailers have examined their portfolio, studied the coherence with their own identity and started to segment their supply in categories, price levels, supply chains, communication and promotions.

CONSUMERS TRUST PL Our surveys before and after Expo2015 have already shown that citizens-consumers consider retail brands potentially more trustworthy than the industry. The place of their shopping experience allows for a direct relationship and a more effective trust-building than the one that can be developed with brands, even if they are leaders and supported by advertising, and that the same brands offer more and more thanks to the development of identity awareness.

POSITIVE OPINIONS ON HOW INDUSTRIAL BRAND RESPECTED SUSTAINABILITY BROKEN DOWN BY CHANNEL AND WEIGHTED BY TALKABILITY FOOD

CHILDREN

PET

SPECIALIZED LINEES

HOME CARE

PERSONAL CARE

OVERTHE-COUNTER DRUG

TOT.

01.06.2012 31.05.2015

29%

2%

1%

1%

9%

8%

1%

51%

01.06.2015 31.12.2015

30%

3%

1%

2%

9%

9%

2%

56%

POSITIVE OPINIONS ON HOW PRIVATE BRAND RESPECTED SUSTAINABILITY BROKEN DOWN BY CHANNEL AND WEIGHTED BY TALKABILITY FOOD

CHILDEN

PET

SPECIALIZED LINEES

HOME CARE

PERSONAL CARE

OVERTHE-COUNTER DRUG

TOT.

01.06.2012 31.05.2015

30%

2%

1%

1%

9%

8%

1%

52%

01.06.2015 31.12.2015

33%

4%

2%

3%

10%

10%

3%

65%

(Eurosearch talkability survey - Plef 2016)

The retailer’s awareness of this potential has been further stimulated by the penetration of e-commerce, where the value of proximity, logistics, social relations and data management has emerged; all issues to make sustainable positioning choices on.

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PLM - ANALYSIS

PRIVATE LABEL AS A STATEMENT OF SUSTAINABLE POSITIONING Private labels are no longer just mainstream and generic, but qualify retailers’ choices. Basically, they become communication tools for all consistent positioning choices. In addition, environmental and social factors become opportunities to express the reason why and provide evidence of quality. Zero km supply chains, biodiversity supply chains, free from categories, organic and biodynamic, bulk categories, reuse services, recycled and recyclable packaging, environmental and social declarations on the label, suspended expenses, recycled and biodegradable materials and furnishings, fair trade, traceability and safety, active solidarity are all topics that retailers can address by declaring them through the brand name assortment and reconciling them with what the public finds in the store: the type of structure, the organization and approach of the staff, the promotional model, the technological supports, which can be combined with the intrinsic quality of what is bought. Ultimately, the wellbeing that can drive from the shopping experience, i.e., "I go to a store whose purpose is akin to my own, the experience was satisfying, I can count on a trusting relationship."

Following this analysis, the positioning of the modern retailer, once dependent on a functional purpose - buying and selling better - is now based on a relational purpose - building trust to count on. In this regard, paradoxically, retailers must thank discounters first, and then e-commerces. In fact, in a global change imposed by sustainable development, these competitors have brought out the potential of brands through their own brands, becoming the best allies of the ‘portfolio democracy’ theorized by the civil economy of Beccehetti, Zamagni and Bruni and carried out by the Next movement, which can find its ideal interlocutor in largescale distribution. Given this potential, where are the actions in FMCG today that impact sustainable development goals and can guide the choices of retailers with their own brand portfolios?

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ANALYSIS - PLM

IMPORTANCE OF IMPACTS TO BE PURSUED

Social Impact

Environmental Impact Economic Impact

IMPORTANCE OF CATEGORIES TO INVEST IN

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PLM - ANALYSIS

IMPORTANCE OF INVESTMENTS TO BE DONE tema ambientale SDGsSDGs Environmental subject 45 40 35 30 25 20 15 10 5 0

2017

2018 6

2019 7

2020

13

14

2021 15

SDGs Social SDGs temasubject sociale 35 30 25 20 15 10 5 0

2017 1

10

2018 2

3

2019 4

2020 5

8

2021 10

16

ANALYSIS - PLM

PL PRIORITIES IN SUSTAINABILIT Y The priorities - equally important - are the following: - environmental priorities reporting no negative effects on the climate with evidence of carbon neutrality, or responsibly declared ecological footprint for the adjustments made; - social health-related priorities, both for the ingredients used, the virtuous characteristics of their origin and the proven effectiveness of the benefits claimed.

These priorities concern a large part of agro-food products and beverages, but also personal care products, and increasingly involve product development interventions rather than packs, even if commitments to certifications and interventions on production processes remain very significant, compared to cooperative and philanthropic attentions.

POTENTIAL YET TO BE EXPRESSED So, is everything okay? Retailers are increasingly developing their own sustainable strategic positioning. Their private brands have a decisive role in expressing this positioning and are even a driving force for coherent changes in the structure and internal processes. Nonetheless, they benefit from the presence of discounters and virtual competitors, the recognition received from citizen-consumers is higher than that of the industry. Yet, what is lacking is the courage to fully seize this opportunity, that is making brand policies the strong point of sustainable strategic positioning in the entire market, rewarding the suppliers, who are in line with the virtuous choices of the brand with partnerships. In addition, promotional policies can be adopted on the entire shelf assortment to favor conscious and not compulsive or speculative choices of citizen-consumers, making that emerging relational relationship evolve into a positive sociality. Of course, there are different situations between the national chains of property and those in franchising, between the central coordination, the coordinated territorial poles and the individual entrepreneurs associated locally.

However, the sustainable strategic positioning and the same construction of the portfolio of brands of the sign can be enriched by this diversity that in the end is the Italian distribution model, the relational one, the most human that there is. Whoever, in the large-scale retail trade, will be able to express this ‘human-side’ in the best possible way, also thanks to technology, by stimulating the pro-activity of citizens-consumers, and will be able to have an authentic, but coherent and competent voice with the choices of their products, making their distinctiveness understood, will get in return extraordinary consumer response, so much so as to attract even industrial suppliers to adopt a role in line with the sustainable strategic positioning of the brand.l

Emanuele Plata co-founder, past president, board advisor PLEF 11

PLM - COVER

Sustainability in PLs

raw materials, EMISSIONS

and community, the must-haves for brands In order to implement an effective and multi-sector sustainability policy, however, it is essential for brands and co-packers to share common goals.

“Today, in Italy, as well as in the rest of Europe, sustainability is the meeting point between supply and demand," says Emanuele Plata, co-founder and past president of Plef. "Private label products represent an aspect of this theme when their added value is based on transparency, quality, traceability, correct information regarding disposal methods and energy (or ecological) footprint. In order to implement an effective and multi-sector sustainability policy, however, it is essential that brands and co-packers have common intentions, failing which the brand seeks other partners through scouting processes."

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COVER - PLM

u PL sustainable packaging: research by Osservatorio Immagino In June 2021, a study published by institute ‘Osservatorio Immagino GS1 Italy’, in its tenth edition, examined a basket of 125 thousand products, 37 thousand of which were PLs. The institute grouped the ‘sustainable’ claims under 4 thematic macro-areas: sustainable resource management, sustainable agriculture and breeding, social responsibility and respect for animals. However, unlike what happened for industrial products, PL products dominated one focus in particular, that of packaging sustainability. "We made this choice to surf the wave of current events - explains Samanta Correale, Research Manager of Osservatorio Immagino - from January 1, 2023, in fact, European obligations regarding environmental labeling for packaging will come into force in Italy."

Source: Data published in issue no. 2 of 2021, Osservatorio Immagino

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PLM - COVER

CARREFOUR'S RECIPE: SUPPLY CHAIN PACT, NO WASTE AND VALUE TO SPECIALIT Y

This is the case of the Food Transition Weeks in November 2021, when Carrefour Italia chose its new suppliers and signed a ‘Pact of Commitment and Co-Responsibility’ with them to implement sustainability policies, as well as the enhancement of local for the following years, as it had already done in September with the producers of Parmigiano Reggiano Dop. In general, Carrefour's commitment to a lower socio-environmental impact has focused on several issues: from the need to save about 20 thousand tons of packaging by 2025 by using eco-friendly packaging, to reducing by 30% by 2030 the CO2 emissions related to the purchase of goods and services, passing through the age-old issue of food waste. "We were the first large-scale distribution company to collaborate with ‘Too Good To Go’ in 2019 recall from Carrefour- in 2021 we signed with them the ‘Pact against waste’, which allowed us to save 260 thousand ‘magic boxes’ of food close to expiry". From the point of view of sustainability and promotion of the territory, the brand has also collaborated with public bodies: in 2021, synergies were established with the Piedmont and Lombardy regions to promote regional products certified as "DOP" and "IGP" (in the case of Lombardy, also "PAT " and "Fdai"). Now the aim is to replicate the experience with other Italian regions. Carrefour is persuaded that, given the choices of each corporate governance, whose economic return is far from immediate, consumers' indications play a pivotal role.

Carrefour: packaging targets

-20 thousand tons of ‘classic’ packaging in PL by 2025

-30% of CO2 by 2030

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COVER - PLM

CLICK & WATCH

u PL with ‘talking’ packaging

Packaging recyclability is one of the most widespread claims on PL products in largescale distribution. If in absolute terms, it covers 54.4% of references, i.e. +7.4% compared to the previous survey, when it comes to products sold in hypermarkets and supermarkets the percentage reaches 77.3% (with only 22.7% without any indication on pack sustainability), against a share of 58.3% of large-scale industry products. "If we look at some industries, such as that of beverages, labeled products depend, among other factors, also on the choice of materials that bottles are made with.

- underlines Samanta Correale - Think about glass: it is a recyclable material par excellence, so today very few companies use labels with disposal and recycling indications, but we'll see what the legislation has in store for us in the future".

Source: Data published in issue 2 of 2021, Osservatorio Immagino

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PLM - COVER

M O R E R E C YCL I N G A N D F E WE R E M I S SI O N S AT L I D L , WH E R E 8 0 % I S PR I VAT E L A BE L

"Adopting sustainable policies not only benefits the environment and society, but also contributes to the long-term success of the company. However, we need to be prepared for continuous renewal. - says Alessia Bonifazi, Communication and Csr Manager of Lidl, the discount store that has an offer composed by 80% of PL products and that has chosen as claim ‘On the way to tomorrow’ - we have decided to act on three macro areas: environment and climate, conscious consumption (and healthy food), community and territory we live." In 2021, the company launched a line of sportswear ‘Crivit Ocean Bound’ made with plastic collected from beaches. In the same year, it created a line of household products with polymers 100% recycled by the company PreZero, part of the same Schwarz Group, which can be considered as a virtuous example of intergroup circular economy. The goal is +25% recycled plastic materials in private label packaging by the end of 2025. As for the assortment, Lidl has recently expanded the range of sustainable products under the ‘Vemondo’ brand, by further enriching its already numerous certified references (Bio, Fairtrade to name a few), its regional specialties and the so-called ‘Next Level Burger’, 100% of vegetable origin, whose production cycle releases 91% fewer emissions than a classic meat burger.

THERE’S STRENGTH IN ALLIANCES: COOP'S INCLUSIVE, CROSS-CUT TING VISION

For Coop, sustainability is an all-embracing concept that is not limited to environmental protection alone. The brand can boast supply relationships with an average duration of 30 years and very few defections. "It is a sign - says Managing Director Maura Latini - that producers are seen as true allies with whom to share a path and a vision. Certainly, this kind of policies require a radical cultural change and investments, some of them substantial. For example, in newly designed livestock farms, this means enlarging spaces, using straw and bedding, introducing video surveillance systems, and balancing the livestock's diet plans." The topics of decarbonization and plastic reduction were certainly mainstream in 2021. Already back in 2013, Coop eliminated microplastics from branded cosmetics, toothpastes and detergents with its ‘Vivi Verde’ line. In a three year span, that is since joining the Pledging Campaign, the company has saved 8,500 tons of virgin plastic by replacing it with recycled plastic. This switch on branded mineral water bottles alone, in June 2021, in fact, meant saving 1,000 tons of plastic. Moreover, the brand has replaced, where possible, diesel-powered trucks with LNG-powered vehicles, and optimizes loads by making the vehicles travel as full as possible.

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COVER - PLM

Lidl: figures

80% private label products Target +25% recycled plastic in PL by the end of 2025.

Coop: solid relationships and results

30 years average duration of supply relationships -1000 tons of virgin plastic on PL products

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*

COVER - PLM

CONAD AND THE ‘FEDER ALISM’ OF LOGISTIC HUBS

"When it comes to logistics - recalls Plata - a worth-mentioning case is that of Conad that, in order to drastically cut the number of routes, has converged suppliers on 4 national hubs, from which vehicles of the brand depart to reach regional industrial distribution centers (CeDi)". The commitment to protect the environment and resources is an integral part of the Bologna-based brand's strategy, entitled ‘Sosteniamo il futuro’ (Sustaining the future).

In Conad, sustainability on PL products equaled 4.8 billion of the 2021 turnover, totaled in over 3 thousand stores throughout Italy. Today, 70% of the over 5,000 PL products have sustainable packaging. The brand, in fact, has replaced the packaging of virgin pet with others made of 100% recycled pet, with an eco-design operation recognized by Conai (the National Packaging Consortium), which led to estimated savings of over 13 million bottles of virgin plastic in two years.

In addition, Conad has reConad: sustainability on PL products ceived the Conai ‘Best Ideas award’ for the sign to be displayed at points of sale billion of total turnover 2021 to inform customers how to dispose of pre-wrapped of over 5 thousand PL products products used for butchery, have sustainable packaging delicatessen, fishmonger and bakery products.

4.8 70%

ALDI' S COMMI TMEN T TO THE ENVIRONMEN T A N D S U S TA I N A B L E P U R C H A S I N G P O L I C I E S

"When it comes to energy footprint- adds the former Plef President- "We cannot help but mention Aldi's commitment, which has recently opened stores in the province of Brescia with almost zero emissions. This was possible thanks to the international 2030 ‘Zero Carbon’ strategy, but in particular to the ‘Today for Tomorrow’ program of the Aldi Italia division. In fact, the company is committed to ensuring maximum traceability and transparency throughout the supply chain; it requires the adoption of fair and decent business practices so that the assortment is socially, as well as environmentally, sustainable. Since 2016, thanks to the Fairtrade project, Aldi Italia has been supporting 16 cooperatives of coffee producers in Honduras, providing training in farm management, human rights and farming practices. With regard to sustainable purchasing policies for fish and some commodities, such as cocoa, coffee, tea, wood and cotton, Aldi Sud Group has set out some guidelines for PL products, which are binding for both the purchasing department and suppliers. The discount store also offers berries in packaging made entirely from plastic collected in areas affected by climate disasters, thanks to the collaboration of Plastic Bank. Moreover, fresh eggs are sold in 100% paper pulp packs ( 70%-at least-recycled).

Aldi: environmental and social sustainability

Pdv of Moniga del Garda (Bs) emissions almost 0

16 farming communities supported in Honduras

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PLM - COVER

TOWARDS ESSELUNGA'S 2025: CERTIFIED PRODUCTS, BLOCKCHAIN AND SOCIAL SUSTAINABILITY

Esselunga and PL strategies until 2025 Until 2025: ‘Pesca sostenibile’ certificate for fresh and frozen fish ‘Cacao Sostenibile’ beans 100% guaranteed fair trade with blockchain 1.135 million euros to support farmers in Togo

Despar e la sostenibilità

3.300 i prodotti Mdd su cui si sperimenta la sostenibilità

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All the fourth range packaging of Esselunga's Bio line is also fully compostable and biodegradable, another brand that has chosen to ‘diversify its portfolio’ of sustainable actions. After making its honey a traceable and certified supply chain product, in 2021, Esselunga began converting its milk, both fresh and uht, into a ‘Benessere Animale’ (Animal wellbeing) certified product. Esselunga looks at 2025 with the so-called ‘Sustainability Strategy Plan’. One of the objectives is the ‘Pesca Sostenibile’ (Sustainable Fishing) label for 100% of the fresh products of the Esselunga and Naturama chains obtained from fish farmed in Italy, as well as 100% of the brand's packaged, frozen and long-life fish products. The Pioltello-based company has expanded the use of eggs from free-range hens for PL products, with the goal of reaching 100% by 2025.

Then, there is the ‘Sustainable Cocoa’ project launched in 2019. Within the next three years, this project will result in the use of private label chocolate, 100% guaranteed fairtrade beans, tracked with blockchain technology from the field to the finished product. This initiative was created not only to ensure the transparency of the supply chain, but also to support the communities of cocoa farmers in Togo. The total investment will amount to 1.135 million euros over five years, 575 thousand euros of which were allocated by Esselunga and 560 thousand euros came from customers' Fidaty points (frequent customer card).

DESPAR RETHINKS PL PACKAGING, BUT THE REAL CHALLENGE IS THE RIGHT PRICE

"As Despar Italy headquarters, we are working closely with the suppliers of our 3,300 branded products, who, in turn, are developing sustainability policies,"- explains Michela Cocchi, PL Brand Manager of Despar Italy. So far, the 2021 commitment of the brand has mainly translated into the greenest restyling of many branded product packaging.

"For example, we have adopted recyclable paper trays for cold cuts and packaging made of FSC-certified paper; we have eliminated packaging to be disposed of in undifferentiated waste in favor of packaging to be stored in plastic, which is also 100% recyclable. Sustainability policies are undoubtedly a worthy cause and have to be doggedly pursued.

However, they do have a critical impact on the final selling price - concludes Cocchi - the consumer asks for more sustainable products but usually doesn’t want to bear the cost.

So, the real challenge is to find the right balance."

COVER - PLM

u PL packs win silver medal for label indications

As for the share of ‘talking’ products, but also actually recyclable (100% or mostly), for private label products it amounts to 85.4% of total surveys. It’s a good silver medal that is slightly different from the leadership that isn’t so far from the top 20 of the industry, with almost 90% of products. Followers and other smaller FMCG suppliers, on the other hand, come in at 80%. These data, beyond the absolute numbers, confirm the strength of private labels in conveying sustainability information, particularly that of packaging, and the tendency not to sit on their laurels in the constant comparison with the brand of large-scale distribution.

Source: Data published in issue 2 of 2021, Osservatorio Immagino

Economic sustainability at Crai

400 references selected

from among the PL products by ‘Salva spesa’ THE IS SUE WI TH PR ICE S AND CR AI’S INI TIATIVE

"In fact, the pricing policy should reflect the minimization of negative external factors," comments Emanuele Plata, "something that doesn't really go along with maximum margin or convenience. Experimented in the late 1990s and early 2000s, one way of reconciling these two needs was bulk sales, which didn’t have the desired success and remained a niche. Some instead adopted everyday low prices to avoid excessive storage." February 1, 2022, Gruppo Crai launched ‘Salva spesa’. In the context of this initiative, every three months, in turn an offer of references selected from the main 400 Crai-branded products participating is proposed. The basket includes typical everyday shopping products, whose prices have been blocked for the entire period of the initiative. "This initiative is the natural continuation of the path we undertook some years ago - affirms Mario La Viola, Director of Marketing, Format, Network and Development of Gruppo Crai. actions such as this take on even more value at a time characterized by rising raw material prices, the explosion of energy and transport costs."l

Maria Teresa Giannini, Professional Journalist specialized in Large-scale Distribution.

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PLM - FROM THE DISTRIBUTION’S POINT OF VIEW

LET 'S HAVE A TALK WITH PL MAGAZINE AND PIETRO POLTRONIERI, PL MANAGER OF THE CRAI GROUP.

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FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

Cost-effectiveness and ecology in shopping cart

Crai

With its 6.2 billion turnover in 2021, the group is absolute proof that innovation, cost-effectiveness and sustainability can be combined to give great visibility to one’s own brands.

Last February, Crai launched the ‘Salva spesa’ (Safe the shopping) initiative on a basket of almost 400 PL references. In a moment where prices of fuels and raw materials are increasingly rising and threaten the purchasing power of consumers, this is a very interesting launch. There’s Pietro Poltronieri, PL Manager of the Group, to talk with PL Magazine.

How did ‘Salva spesa’ initiative come about?

For more than one year and a half, in other words, since right after the first lockdown, we’ve been working on containing the price of about 150 frequently bought products, on a threemonth rotation. In the last weeks, we have decided to relaunch the activities expanding the basket in terms of number of references while renewing our commitment through a new way of communicating with the consumer. Our aim is to communicate Crai’s great attention to its customers' needs. In fact, it is thanks to the great value-for-money of its PL, which boasts a cross-category presence, that Crai manages to meet all their needs. Finally, this initiative hasn’t come about overnight, but it has already been tested and it will take into account, with regular updates, the seasonality of the demand. This strategy is actually working and has been an opportunity to show our customers our commitment to cost-effectiveness as well as to improve the commercial performance of PL in the categories concerned. The result?

An increase in PL share and higher customer loyalty.

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PLM - FROM THE DISTRIBUTION’S POINT OF VIEW

Turnover

6.200 (million euros) of estimated turnover in 2021

PL incidence on sales :

GRUPPO CRAI Date of Birth 1973

Number of PL references: over

3.100

2.000

(1.500 food and 1.600 drug/toiletries)

Total number of partners

11 Ce.Di. (food channel)

12 Ce.Di.

(drugstore channel)

What does Premium represent for Crai?

To us, above all, premium means ‘Piaceri’ (Pleasures), our line that includes traditional made-in-Italy food products and that was completely relaunched last year, strengthening and completing the assortment - with 80 new references, to reach a total of 300 in total -. But the restyling of the packaging, of the brand and of the communication helped a lot. And I must say that our clients’ feedback was extremely positive.

Let’s talk about your brands and their positioning...

Crai brand represents the mainstream, the heart of the supply, while ‘Piaceri’ is for the premium segment. We also have a specific segmentation with lines dedicated to organic, healthy products under the ‘In armonia’ brand (In harmony) and frequently bought products. In addition to that, we have several basic versions, such as in food preparation, ‘Cuciniamo Crai’ for desserts, and ‘Crai Farma’ for the parapharmaceutical world. Even though there’s no ‘Crai’ wine yet and, therefore, we can’t sell directly, we work on a limited selection of labels in collaboration with our suppliers, which brings us to have about 70 products, combined according to the territory.

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Source: company data for Distribuzione Moderna

18% Lcc

Sales points in total:

FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

To which extent do your labels impact sales?

For about 18% on sales, considering the whole packaged large-scale consumption. In some areas we also reach more than 25% of share.

However, if we consider only the controlled categories, the figure increases by two points.

In what direction are your launches going?

For two years, we’ve been working on the innovation of our specialized and premium lines, partly because the mainstream has been consolidated for quite some time and requires, more than anything else, control, management and periodic fine-tuning. Niches, instead, deserve real entry operations. In fact, in the last year, we have worked a lot on our ‘Piaceri’ line to complete the supply. In the future our focus will be sustainability. After all, we already have ‘Crai eco’, which embodies all home and personal care products with a strong green connotation.

However, we want to approach other segments and launch new references, in line with the current needs of the market.

Sustainability, I guess, will involve a lot of extra work for you and your suppliers...

Sure. And this work concerns, besides formulas, especially packaging, due to our sustainable choice and use of recycled materials. We’ve already replaced - for about 200 products - packaging made from virgin plastic, with recycled plastic. When possible, we’re trying to shift towards more sustainable materials. In the past, the main focus with our partners was the finished product, now, instead, packaging is always a key aspect to address. So, during the discussion, there are not only the suppliers-partners, but also packaging producers. By sharing its know-how, Crai often wants to bring together all the players involved, while encouraging the exchange of expertise, to identify sustainable solutions, suitable for the different types of products.l

Luca Salomone Professional Journalist specialized in Consumer Goods, Distribution, Shopping Centres and Finance.

25

PLM - THE PRIVATE LABEL SCENARIO

The inflation

challenge IPLC, boutique consulting firm, has consulted its network and hundreds of suppliers to determine exactly what challenges are being faced across all markets and how suppliers are tackling what has become the biggest cost crisis in many years.

26

THE PRIVATE LABEL SCENARIO - PLM

T

he current level of food & drink inflation across all countries offers a great opportunity for private label suppliers to increase their sales. But how can this be done profitably in a climate of ever-increasing costs?

Through our offices in Italy and Europe, we have consulted our network and engaged with hundreds of suppliers to determine exactly what challenges are being faced across all markets and how suppliers are tackling what has become the biggest cost crisis in many years.

IPLC RESEARCH REPORT 2022 "Surviving the Cost Crisis. An opportunity for Private Label manufacturers" seeks to achieve three things:

1

To explain why costs are increasing.

2

To share how suppliers and retailers are managing this cost inflation.

3

To help suppliers who are struggling to make progress in achieving cost increases.

27

Food & Beverage consumption is served

Plates, Cups, Cutlery and other Tableware products: affordable and matching your innovation and sustainability asks Solutions Single-use | Reusable | Recyclable | Compostable | Made in EU Materials Plastics | Bio-plastics | Natural fibre | Paper, including plastic free

www.doplagroup.com

THE PRIVATE LABEL SCENARIO - PLM

T

o explore the current cost inflation challenge IPLC undertook a series of research and engagement exercises that have enabled us to bring you this report. In January 2022 we engaged 33 private label manufacturer companies, from seven different countries, in one-on-one interviews to explore their challenges in more depth. The thirty-three suppliers we spoke to directly and the 95 who completed our survey pointed to overall inbound cost increases of between 11% and 14%.

HISTORY REPEATS ITSELF? The cost of everyday grocery items has seen significant inflation in the last two years. When the global pandemic struck in February and March 2020 we saw an immediate spike in demand for take-home groceries as shoppers stocked up to prepare for anticipated lockdowns. Food commodity prices fell initially but began ticking back up again from June 2020 and have continued to rise since then. Some of us will remember that a similar food commodity cost spike happened in 2007-8 around the global crash, and again in 2010-11. The 2007-08 commodity cost spike reversed within a year, but in 2011 it took 5 years for the cost inflation to fall back, so who could predict what might happen this time? This is an important consideration both for the retailer’s competitive position and the manufacturer’s anxieties around relationship management and long-term financial stability.

(5 – 6 ) UN Food & Agriculture Organization Global Food Price Index

29

PLM - THE PRIVATE LABEL SCENARIO

THERE ARE KEY DIFFERENCES THIS TIME AROUND Limited range discounters have grown strongly in most markets. In the intervening fifteen years, the discounters have penetrated strongly and private label is a much bigger part of the picture. The biggest customers are now often discounters who have considerably more control and visibility of the costs. It is going to be more difficult for suppliers to negotiate a cost increase in this context.

Taking the Irish market for example, in 2008 Aldi and Lidl had a combined 10% share whereas in 2022 they will have over 26% share of the market. Thanks to this, Ireland currently has one of the lowest rates of food inflation globally, which indicates a tough environment for suppliers with cost inflation challenges.

30

THE PRIVATE LABEL SCENARIO - PLM

O

ver the last 15 years, in an environment of rising discounter penetration, the established multiple retailers were losing market share and had to respond. And those competitive strategies consisted largely of refocusing on a bigger and better private label range and a sharpened price position. The impact of this is that most retailers stock the same core of 1,400 high volume, low margin products. They are highly price sensitive and it is especially difficult for the relevant suppliers to negotiate a cost increase because the retailers feel that they cannot pass on a retail increase.

The current cost inflation has continued for almost two years. In 2007 the price spike was quickly followed by a drop in 2009. But this time, between March 2020 and March 2021, food commodity prices increased by 25.3%.

Suppliers may have negotiated price increases with their customers at that point. The problem is that between March and December of 2021 food commodities have continued to inflate by a further 14.4% so suppliers will need to review this again.

(5 – 6 ) UN Food & Agriculture Organization Global Food Price Index

31

PLM - THE PRIVATE LABEL SCENARIO

A

s grocery retail contracts are reviewed in Q1-2022, nearly 80% of companies said they will be increasing their quoted costs. When polled in December 2021, suppliers had agreed cost increases averaging +6.8% but 43% of respondents had achieved only an increase between zero and 5%. So, looking into 2022, 95% of suppliers told us they will need to achieve further cost increases averaging +8.8%.

In the meantime, 54% of companies are continuing to supply below cost on some products to selected customers with the effect that 35% of manufacturers are under severe financial strain.

WHAT MIGHT HELP? Our interviews identified a few more strategies that appear to have helped suppliers in their quest for survival through this escalating cost period. A focus on the most important customers and products, whilst ensuring availability is prioritized, has helped. Being pro-active, as a supplier, both in the past and now has proved worthwhile in building relationships of trust and openness with the customer. Offering cost reductions in the past, without the customer requesting them, builds trust and places the supplier in a stronger position when costs need to rise.

32

THE PRIVATE LABEL SCENARIO - PLM

FUTURE DYNAMICS There is an assumption that pandemic related disruptions will sort themselves out relatively quickly. This is reflected in comments from economists and central banks who are suggesting that the current record level inflation will begin to moderate through 2022 and 2023. But beware, this only means that the inflation rate will reduce slightly. It does not mean that your cost inputs will get any cheaper, just that they will inflate at a more moderate rate. When we asked the participants at our December webinar, here is what they told us:

• Only 11% felt that costs would return to prepandemic levels in the next 12 months • 40% felt it could take up to 3 years • 11% felt costs could correct within 5 years • But 38% felt that costs may never return to ‘normal’ levels

C

ertainly, the short-term provides some great opportunities for businesses involved in offering good value-for-money. Spending power is reducing internationally, and consumers will be looking to optimize their budget by buying more products on promotion and visiting more low-price retailers. Private label is well poised to take advantage of this, as it usually does in times of inflation or recession. Retailers will continue to look to differentiate from their competitors and offer great, innovative new products. It is definitely time for private label manufacturers to seize the opportunity.

Read on to understand how:

Stefano Ghetti, partner IPLC Italia 33

PLM - FROM THE INDISTRY’S POINT OF VIEW

LET 'S HAVE A TALK WITH PL MAGAZINE AND SERGIO ANTONIUZZI, ICEFOR PRESIDENT.

34

FROM THE INDISTRY’S POINT OF VIEW

- PLM

Icefor: sustainability

is our added value

The Lombard company, of the Antoniuzzi family, offers high-safety and multi-certified products to many business units and many channels. When on the label, these guarantees are a great source of attraction for the retailer.

by Luca Salomone

Icefor, based in Magenta, in the district of Milan, is an expert in its own brand and subcontracting production of cleansers, detergents, emulsions, waxes and disinfectants. “Ours is a 40-year-old history - explains the President, Sergio Antoniuzzi - of great innovation that materializes in our constant research for new technical and technological solutions, which are added value to our products and processes. It’s know-how that evolves and that is now at its third entrepreneurial generation.”

What are your markets of reference?

Icefor is divided in four divisions, each corresponding to a different target: retail, with our own brands, professional, horeca and private label. The company developed a PL strategy that combines the excellence of the demand with its experience in R&D and production.

What’s the future of research?

Sustainability is undoubtedly crucial. So our assortment has only 100% green detergents, made from low-impact raw materials, renewable vegetal sources, with Rspo (Roundtable on sustainable palm oil) certification, not animal-tested nor of animal-origin surfactants, (Ecobiovegan and Ecobiocontrol logos). All products have 100% post-consumer recycled and certified second-life plastic packaging, which guarantees material traceability, and

35

1978

Staff/ Numbers of employees

32

Turnover 2020

12.12 millions euros (Tuttodati Source)

% Growth 2021/2020

+3

in volume

Top management

Sergio Antoniuzzi (president), Daniela Antoniuzzi (vicepresident), Diego Ferrari (Head of Production), Maria Grazia De Vecchi (Head of Technical Department), Silvia Lonzi (Head of Quality, Environment, Health and Safety Department).

packaged in Fsc carton boxes, palletized with 100% recycled film. I think it’s important to underline that we use vegetable glycerin, with high efficiency and low volatility, not falling into the category of volatile organic compounds (Voc), which safeguard our respiratory health. But there’s more: our ecological Ecolabel detergents are unique in Italy and were approved by the Legambiente Scientific Technical Committee and, for this reason, they have the ‘Legambiente recommended’ logo.

36

Source: by Distribuzione Moderna based on company data

Date of Birth

-

INTERVISTA...

DALLA DELLAPOINT DISTRIBUZIONE PLM FROM THEPARTE INDISTRY’S OF VIEW - PLM

What are the advantages for clients?

Of course clients can boast the label of all the above mentioned certifications, and also of the Aise charter, released by the International Association for Soaps, Detergents and Maintenance Products with the label ‘Nichel, cromo, cobalto tested’ and with the ‘Free Voc, Edta, phosphates and isothiazolinones’ reference, to limit indoor pollution and protect consumer’s health. That’s because, since the beginning, Icefor has used high-biodegradability surfactants in its formulas, with no hazardous substances for men and the environment. Icefor also realized the first Ecolabel detergent in 2002.

What are the most popular products in large-scale distribution?

In the past, clients were constantly looking for low prices, also for lower quality.

Now, instead, consumers are more conscious and ask for quality and effective performances. And the request for sustainable products that protect the environment and the health of the user is much more important than before. This aspect is increasingly relevant not only in the professional cleaning industry, but also in the market of large-scale distribution. Furthermore, during the Covid-19 pandemic, the market finally realized the importance of using medical surgical device disinfectants with virucidal effect, in other words, effective, safe and, especially, tested to assure the destruction of the most dangerous microorganisms.

What’s the average duration of your contracts with distribution?

Are long-lasting relationships?

Over years, we have created long-lasting partnerships and authentic collaborations because several companies are looking for loyal and multi-certificated partners. Our collaboration with some international companies has been ongoing for more than 30 years. In these last years - this is very important too - we’ve established new collaborations, wth primary clients that share our values.l

CERTIFICATIONS

Iso 9001 system of certificated quality (since 1995)

Source: by Distribuzione Moderna based on company data

Iso 14001

certification of other environmental performances (since 1997)

Iso 45001

certification of worker health and safety (since 1999)

BRC CONSUMER PRODUCTS

consumer products, international standard of guarancy and protection of the consumer (since 2007)

IFS

international certification of products manufactured under third-party brands (since 2017)

37

PLM - MARKETS

PL Cosmetics

booming again Large-scale distribution confirms its leading role in consumption also in this sector and the turnover of third-party production is back to pre-pandemic levels, mainly due to exports.

W

ith the gradual transition to ‘normal’ life and consumption habits following the successful vaccination campaigns, in 2021 the cosmetics and personal care sector - according to Centro Studi Cosmetica Italia recorded a 8.5% growth in the domestic market, for a total value of 10.6 million euros compared to last year.

Large-scale distribution exceeded 4.5 billion euros (+1.5%), confirming its leading role in cosmetics consumption with a 42.5% share, also due to the excellent performance of PL products. The turnover of contract manufacturing, in fact, is back to pre-pandemic levels with around 2 billion euros (+20%), backed by the strong increase in foreign demand, the true driving force behind PL manufacturers’ growth. As far as the domestic market is concerned, in terms of contract manufacturing, holding a share of roughly 40%, largescale distribution brands are the leading distribution outlets. Nonetheless, their lines prove to be increasingly more versatile and able to capture current consumption trends.

38

n n n n

MARKETS

- PLM

+20%

increase in Despar branded lines in 2021, especially in body care.

39

Mercoledì 13 aprile 2022 15.00 - 16.00 EVENTO PHYGITAL

Live streaming dalla sala Melodia di Marca by BolognaFiere

Benessere e sostenibilità, la marca privata diventa protagonista Partecipano: Paola Monica Dimaggio - Private label Manager & Sustainability Coordinator di Penny Market Italia Filippo Fabbri - Direttore generale di Despar Italia Introduce: Emanuele Plata - Consigliere PLEF e membro dipartimento Benessere Integrale del PAMI-Pontificia Accademia Mariana Internazionale Modera: Maria Teresa Manuelli, Direttrice Editoriale PLM Evento promosso e organizzato da PLM - Edizioni DM Evento gratuito a iscrizione obbligatoria

ISCRIVITI Info: eventi@edizionidm.it

Partner

MARKETS

- PLM

+20% growth

in Selex branded beauty products in 2021.

INCREASES ABOVE THE MARKET AVERAGE According to Calogero Giuliano, PL Product Manager at Despar Italy, despite the hurdles of the pandemic, the cosmetics sector has shown no major contractions: "On the contrary, our PL lines have been successful, especially in the body care category, which reached +25%, mainly thanks to products with antibacterial and hand sanitizers. Flatter, on the other hand, were sales of hair care and oral hygiene references." Important results also for Selex branded products, which - says Luca Vaccaro, PL Director of the Group - ended 2021 with +20% growth: "This is a very positive figure and above the market average, which we managed to record in all the categories covered by our ‘Armonia & Benessere’ brand, a line of products that combines the effectiveness of the most innovative active ingredients with aromas that enhance all senses. " 41

PLM - MARKETS

A 2021 IN FULL RECOVERY Over the years, large-scale distribution brands have expanded their PL supply to cover virtually all beauty segments. "We have 27 lines manufactured in-house and specialized in beauty and personal well-being," says Benjamin Schneider, Head of Marketing Purchasing at Dm Drogerie Mrkt, "whose turnover last year recorded a 15% growth compared to 2020, despite the difficulties encountered during the pandemic.” According to Alessia Bonifazi, Head of Communications & CSR at Lidl Italy, in 2021 beauty products got back on consumers' shopping lists following the resurgence, yet gradual, of social life: "There has been, in particular, a greater attention towards natural cosmetics with certified ingredients and extracts of plant origin. Our personal care brand ‘Cien’ has gone exactly in this direction, developing more and more natural and sustainable references, from active ingredients to packaging."

INCREASINGLY NATURAL PRODUCTS One of the trends that seems to be consolidating in the beauty sector is that of increasingly natural cosmetics. "In recent years we have developed and included in our assortment ‘Cien Nature’, a certified organic line - continues Alessia Bonifazi - which includes pomegranate shampoo and shower gel, intimate cleanser and liquid soap. To take a further step towards 100% sustainability, we have recently introduced solid cosmetics, certified Vegan (100% vegetable origin) and ‘zero waste’ in terms of packaging. still under the brand ‘Cien Nature.’" Selex, whose range has recently been enriched with face masks, is also focusing on natural cosmetics. "Our products are all developed by leading companies in high-level cosmetics - explains Luca Vaccaro - and tested for all skin needs. To complete the 70 references of Armonia & Benessere, 27 additional references for face and body care made with raw materials of plant origin and organic extracts, dermatologically tested for sensitive skin and Bios-certified."

+15%

42

trend in sales 2021 of the 27 lines manufactured in-house

by Dm Drogerie Mrkt.

--

MERCATI MARKETS PLM PLM

Lidl's personal care brand is increasingly developing natural and sustainable references, from active ingredients to packaging.

GREAT EMPHASIS ON INNOVATION For Benjamin Schneider, the main objective of Dm Drogerie Mrkt is to offer great quality and innovation, ensuring democratic prices: "In recent years, in our stores we have introduced new make-up and facial care references with particularly delicate and hypoallergenic formulas with a soothing action, to meet the increase in allergies and intolerances. This is the case of cosmetics aimed at preventing and reducing ‘maskne’ due to the daily use of the mask, with purifying formulas based on activated charcoal, blueberries and salicylic acid, including the purifying patches of Balea." Although large-scale distribution brands guarantee valuable products, big cosmetics brands remain an important reference point for consumers. "Our PL lines focus on quality - explains Calogero Giuliano from Despar - and keep the active ingredients of their composition on a higher level compared to leading brands. This is a peculiarity that our consumers reckon. In fact, regardless of the small differences in receipts, consumers choose to buy our products due to a great quality/price ratio. We are working on the development of innovative products and, in the near future, we’ll launch a line of personal deodorants, without giving up on our precise and unwavering quality control."l

Fabio Massi, Journalist specialized in Retail and Mass market issues.

43

PLM - QBERG OBSERVATORY

Face Cream: 2021 between PROMOTIONAL

FLYERS and e-commerce QBerg, the Italian Research Institute, leader in price intelligence services and cross-channels assortment strategy analysis, together with Iri, analyzed the supply trend of the subcategory of Face Cream, both on promotional flyers and also on e-commerce websites, during 2021.

44

QBERG OBSERVATORY - PLM

On e-commerce websites fluctuations are clearly slight, with a Display Share constantly above 5%, which confirms that the Face Cream subcategory can’t help but be permanently present in virtual or physical sales points. Surprisingly, it’s the Flyer that best represents the seasonal trends of a category. Comparing, infact, the trend of the purple curve - the Visibility Share of flyer Qp4 - with that of index curve ‘Interest over time’ of Google for the search term ‘face cream’, the two trends appear superimposable. This, once more, proves that the promotional Flyer is a strategic tool for retail to boost certain categories in specific moments, and used as a media-showcase and messenger of convenience.

Visibility Share of 'Face cream' Subcategory and Google 'Interest over time' index.

(2021: Qp4 Share. Dispay Share, Google 'Interest over time' index)

B

y analyzing the visibility of every channel of physical retailer (hypermarket, supermarket, superette and drug specialist) and online retailer (generalist web retailer and generalist PureWeb), it is possible to see the different marketing mix strategies. Therefore, considering 100, as for the entire macro-category of ‘Personal Care’:

u in physical large-scale distribution, drug specialists and supermarkets give more space for Face Cream on flyers, with 5.25% and 4.32% of Qp4 Share respectively; 45

PLM - QBERG OBSERVATORY

u hypermarkets, with 3.92%, are quite distant, while in 2021 on the superette flyers, Face Cream held more than 2% of Visibility Share; u the online world dedicates more visibility to the subcategory: from 5.3% of Display Share of the web retailer to 6.62% of PureWeb.

I

t is well established that only a few big players dominate this industry, but what remains unknown instead is the difference between the flyer and web world and, especially, the impact of private labels on both channels. On the other hand, there's not much to say on concentration, because the Top5 hold less than 70% of visibility on flyers and slightly more than 61% on online, leaving 3.68% and 1.96% respectively in the hands of smaller brands. However, the most relevant aspect is the Visibility Share of PL that, considered as one unique producer, recorded 26.55% of Qp4 Share on flyers, and almost 37% of display Share on e-commerce websites. What strikes the most is this figure because, concerning the online share, it’s actually the PL Share that reduces the visibility of the Top5 and crushes smaller brands. While 26.55% of the flyer is perfectly aligned with the share of PL sales in 2021 (that is a share equal to 26.9% according to Iri Liquid Data), the great imbalance emerged online that is very surprising instead. We, at QBerg ascribe this different trend to producers having less control over retailers action in the online channel.

A

nother indicator that explains the variety of strategies among the different worlds analyzed is the average discount. All the discount actions reported on the flyer or on e-commerce websites, such as the discount, the multibuy, the frequent flyer discount, as well as, the discount and the multibuy for websites were taken into account. In our analysis, we outline the difference between the average discount (intended as the average discount percentage for the subcategory) and

46

QBERG OBSERVATORY - PLM

the average declared discount (in- Visibility Share of 'Face cream' Subcategory and Google 'Interest over time' index. tended as the average percentage of (2021: Qp4 Share. Dispay Share, Google 'Interest over time' index) only those observations reporting at least one discount logic). It is clear that the declared average discount, in large-scale distribution flyers, is relatively uniform, going from 26% and slightly below 30%: the average discount makes a real difference, going from the maximum, 11.5%, of hypermarkets to the minimum, 4.1%, of superettes. This indicator confirms that the promotion on flyers by hypermarkets is twice as frequent as that of suprettes with an activity that leads to a discount percentage.

A

lso in the online world a similar phenomenon of discordance among the channels is observed: if largescale, as well as ‘Pure’, retailers have a declared average discount of 26%, large-scale distribution does very little (2.5% is the resulting average discount), while the generalist pure web reach a very significant 18.5%. When talking of discounts, the traditional large-scale distribution clearly makes different choices on the flyer, that is, the media supporting promotion both in physical stores and on e-commerce websites.

Therefore, considering online large-scale distribution websites only a virtual transformation of the physical shelf would be a big mistake.l

Fabrizio Pavone Marketing Manager and Business Development of QBergg 47