Retailers Look to Score in World Cup
Madrid, Spain – 25/06/2015 – as published by The Wall Street Journal. Contributed reporting.
Promotions That Play on the Emotions of Consumers Can Generate More Traffic in Stores
It reads like a retail riddle: How can a consumer earn nearly €2,000 by spending €949 on a new television?
The deal is part of a competition that was organized by the Media World chain in Italy last month, tied to a much larger competition: the World Cup. Shoppers who bet on an Italian victory in the soccer tournament could get a 200% discount on their purchase if their home team wins.
European retailers are using games, contests, giveaways and discounts in an attempt to score a sales boost from the World Cup. The decline in consumer spending in countries such as Italy in the past decade has led supermarkets to increase the number of promotions and discounts, as well as broadening their product ranges to attract more customers. The sports event is a rare occasion for tight-fisted shoppers in countries such as Italy, Spain and France to loosen their purse strings and get out more.
“When it is the World Cup, we become easily targeted consumers because everyone gets together to watch these types of games,” says Alicia Claros, a 31-year-old stylist in Madrid, who has watched some of the matches in restaurants. “When there is football, people forget about everything else apart from what’s connected to the game.”
Official tournament sponsors such as Coca-Cola Co. are behind some of the fun. But anything related to Brazil, the tournament’s host nation, is considered fair game.Carrefour SA, which backs the French national team, has filled its stores with samba dancers and music.
“Food shopping is boring, so any chance to make it not feel like a chore is an opportunity,” says Sanford retail analyst Bruno Monteyne—who is cheering on the Belgian team. He expects the World Cup to tack on 1% of growth for the month it runs—not an insignificant increase for a sector that ekes out a couple of percentage points of growth at best.
Innovative promotions that play on the emotional involvement of consumers can be successful in generating more traffic for retailers, according to Sandro Castaldo, a professor of economics at Bocconi University in Milan. Yet the investment they require is often significant.
“The benefit from this type of promotion can be significant for the limited period the promotion is related to, but very often doesn’t translate to a steady rise in revenue,” Prof. Castaldo says. “Consumers are no longer loyal.”
There is a lot of guessing of match results going on for both shoppers and retailers. Many of the promotions depend on the ability of consumers to forecast the outcome of home-team games. Carrefour asked the French to predict the score of France’s first three games to win back the cost of their new TV.
Germany’s Metro AG has launched games in its stores around Europe. One of its home electronics chains, Saturn, is running sweepstakes to win prizes for correctly answering unusual questions about the World Cup.
In some cases, it seems the better the national team, the fewer the chances to save. Spain won the last World Cup and was tipped to be a finalist in this year’s tournament. So this year, the retail promotions were tied more to general World Cup forecasts, not Spain’s performance, which turned out to be a savvy move given Spain’s surprising exit from the tournament in the first round.
The Spanish department store chain El Corte Inglés organized a contest to win a year’s worth of Mahou beer for correctly guessing the two teams playing in the July 13 final. The home electronics chain Media Markt in Spain, another division of Metro, ran a similar promotion in May on sales of screens televisions, tablets and computers. Thanks to the promotion, the consumer electronics chain enjoyed a 50% spike in sales of 55in and larger television sets, compared with the same period a year earlier, a spokeswoman said.
The bar is lower for games in countries with weaker teams. In Belgium, which hasn’t participated in the World Cup for 12 years, Carrefour is running a giveaway of €50,000 ($68,000) if the team makes it to the semifinals. (Belgium, it turns out, is off to a strong start and is already through to the last 16.)
Often all fans need is to stock up on provisions for the game. Convenience stores, which don’t run many contests, could be some of the biggest beneficiaries of the World Cup. “They’re open later at night than supermarkets, so if you run out of beer and snacks you can go out and buy some,” says Daniel Latev, head of retailing research and market data researcher Euromonitor.
British retailer Morrisons said that it expected a 25% bounce in beer sales last weekend, the first time the England team took to the field. Sales of disposable barbecues and picnic-ware also soared, the chain said.
However, another factor that is even more unpredictable than soccer results may be in play here: the weather. In a study released last week, the data tracker Nielsen said that a three-degree rise in temperature has a greater impact on retail sales than three goals scored by French striker Karim Benzema.
—Neetha Mahadevan in Frankfurt and Olivia Crellin in Madrid contributed to this article