For a long time, aggressive promotions have been a staple in the marketing strategies of large retailers, especially in the health and beauty aisles—categorized as DPH (Drugstore, Perfumery, Hygiene).
However, as of March 1, 2024, an end has been put to these intense promotional tactics.
This change raises critical questions for consumers and industry professionals alike:
- How will market players need to adapt to this shift?
- What will be the consequences for consumers and businesses?
This article explores the implications of this transition and suggests strategies to cope, such as subscriptions, bulk discounts, and loyalty programs to attract and retain customers.
Starting March 1, non-food product promotions in large stores will face stringent restrictions under the upcoming Descrozaille law. All promotions over 34% will be banned, meaning that retailers will need to overhaul their marketing and sales strategies.
In anticipation of this change, retailers are ramping up attractive offers to draw in customers and maximize sales, directly impacting suppliers and distributors.
Strategies for adapting to the new reality
Since the enactment of the Descrozaille law on March 1, 2024, sensational promotions in the realms of drugstore, perfumery, and hygiene have become relics of the past.
Maximum allowed discounts are now capped at 34%, aligned with food sector limits. This regulation has upended market dynamics, leaving consumers longing for attractive promotions on familiar big brands.
Manufacturers, who relied on these promotions to maintain their market standing, now find themselves reevaluating their strategies. An over-reliance on spectacular offers has diminished the appeal of major brands in the sector. According to recent studies, DPH promotions averaged 35% in 2023, well above the grocery and fresh food sectors already constrained by the Egalim law.
The reduction of these eye-catching offers could make national brands less appealing to consumers, paving the way for private labels, which already enjoy a significant price advantage over national brands.
For instance, in the shampoo aisle, NielsenIQ notes that private labels are on average 59% cheaper (excluding promotions) than major brands. Yet, their market share remains modest at only 13%. It is likely that they will seek to increase their market share in the coming months by leveraging consumer purchasing power.
However, this transition won’t be immediate. Following massive clearance sales in February, consumers have stockpiled non-perishable products, thus delaying the restocking of products on shelves for several weeks, or even months.
2024 is set to be a transitional year for the DPH sector, with potential reductions in promotional spending amounting to several million euros.
A key question remains: how much are national brands willing to sacrifice in terms of promotions to maintain their position?
The more they resist distributor pressure to maintain prices, the more they open the door to competition from private labels. A strategic dilemma that market players must resolve.
New pricing strategies to adapt to the new reality on the ground
As aggressive promotions phase out, businesses must adopt new strategies to thrive in this evolving environment. Here are some recommendations for market players:
- Invest in Research and Development to enhance product quality and innovation.
- Develop strategic partnerships with other brands and retailers to provide greater value to customers.
- Leverage data and analytics to understand customer needs and preferences, and customize the shopping experience, which can boost purchasing power.
- Implement effective pricing strategies to adapt to demand and competitive fluctuations, with a particular focus on suppliers and distributors.
- Create loyalty programs and incentives for repeat purchases to strengthen customer relationships, potentially investing one million euros in these initiatives to maximize their effectiveness.
Brands Facing Change
A. Necessary adjustments in promotional strategies
Retail chains face a significant challenge with the end of shock promotions on hygiene and maintenance products. They must revise their promotional strategies to align with new regulations while continuing to attract customers and maintain profitability.
This involves rethinking promotion mechanisms, favoring more sustainable and responsible offers.
B. Focus on alternatives to shock promotions for hygiene and cleaning products
Retailers can explore various alternatives to shock promotions to promote hygiene and maintenance products. This includes highlighting the quality, durability, and environmental and social benefits of the products.
Loyalty programs, bundled offers, discounts on multiple purchases, and consumer awareness initiatives about the importance of choosing responsible products are all avenues to explore
C. Importance of communication to raise consumer awareness of change
The transition away from shock promotions requires effective communication with consumers. Retailers need to explain the reasons behind this decision, highlight the benefits of the new promotional approaches, and encourage customers to adopt more thoughtful purchasing behaviors.
Transparency about business practices and highlighting the retailer’s sustainable initiatives can build consumer trust and facilitate acceptance of the change.
The Consequences for Consumers
A. Impacts on purchasing behavior and consumption habits:
The end of shock promotions on hygiene and cleaning products is likely to have an impact on consumer purchasing behavior. The latter could be led to reconsider their choices and opt for better quality and more durable products, rather than being influenced by aggressive promotional offers.
This could also lead to a change in consumption habits towards more responsible practices.
B. Importance of educating consumers on the benefits of durable and quality products:
With the end of shock promotions, it becomes essential to educate consumers on the benefits of high quality, environmentally friendly hygiene and cleaning products.
Retailers can play a crucial role by providing transparent information on products, highlighting their sustainable characteristics and raising customer awareness of the environmental and social issues associated with their consumption choices.
C. Reflection on the environmental and social impact of this transition:
The transition towards the end of shock promotions on hygiene and cleaning products offers the opportunity to reduce the environmental and social impact of consumption.
By encouraging consumers to opt for sustainable and ethical products, this transition can contribute to the preservation of natural resources, the reduction of waste and the improvement of working conditions in production chains.
This is an important step towards more responsible and environmentally friendly consumption.
A real need to equip ourselves with a price optimization solution
In this turbulent context, it is essential for retail brands to equip themselves with price optimization solutions. With the disappearance of aggressive promotions, retailers need to rethink their pricing strategy and adopt high-performance tools to help them set optimal prices. What’s more, with the market demanding greater transparency and consumers’ purchasing power fluctuating, these tools are becoming indispensable.
Pricing optimization solutions enable retailers to make informed pricing decisions by analyzing data such as production costs, competition, profit margins, demand and customer preferences. With these tools, retailers can:
1. Analyze and anticipate market trends:
Pricing optimization solutions provide retailers with the ability to analyze historical and current data to identify trends and consumption patterns, enabling competitive and attractive pricing.
2. Adapt prices in real time:
Algorithms built into price optimization solutions allow retailers to quickly and automatically adjust prices based on fluctuations in demand, competition and production costs.
3. Customize pricing based on customer segments:
Price optimization tools offer the ability to define specific pricing strategies for targeted customer segments, based on their preferences, purchase history and price sensitivity.
4. Improve profitability:
Pricing optimization solutions help retailers maximize profits by identifying optimal prices for each product, taking into account costs, profit margins and competition.Pricing optimization solutions help retailers maximize profits by identifying optimal prices for each product, taking into account costs, profit margins and competition.
5. Make data-driven decisions:
Pricing optimization tools provide detailed insights and in-depth analytics, enabling retailers to make informed decisions and justify their pricing choices.
In conclusion, the end of shocking promotions on hygiene and maintenance products compels retailers to rethink their pricing strategies and equip themselves with price optimization tools.
These solutions allow retailers to set competitive prices, quickly adapt to market trends, personalize prices for different customer segments, and enhance profitability. By investing in price optimization solutions, retailers are better prepared to adapt to changing contexts and maintain competitiveness in the market.
The end of aggressive promotions in the DPH sector represents a decisive turning point in companies’ marketing strategies. Large market players will need to reassess and adapt their approaches in response to this regulatory change.
The outcome will depend on how consumers react to these changes, and on companies’ ability to adapt to preserve their competitiveness in the marketplace. A crucial part of this adaptation will include negotiations with supermarkets to redefine terms of cooperation and profit margins.
Companies will have to innovate, differentiate themselves and offer added value to their customers to retain them and attract new consumers. The coming period will be decisive in assessing the real impact of this regulation on the hygiene and beauty industry.
Businesses will need to closely monitor evolving consumer behaviors and preferences, as well as competitive reactions.
Ultimately, the end of shock promotions in the DPH sector offers a unique opportunity to rethink marketing and commercial strategies, to question established models and to explore new ways to attract and satisfy consumers.
