The implementation of the Descrozaille law brings significant changes to the Health, Personal Care, and Hygiene (HPC) sector. This legislation, in line with the Egalim laws, aims to create a fairer commercial environment by limiting promotions to 34%. This measure addresses the issue of excessive discounts that often devalue products, thereby protecting brand integrity and promoting competition based on quality and innovation.
Decrease in Promotional Activities
Recent months have seen a notable decrease in promotional activities, with reductions in both promotional investments and revenues. Specifically, there has been a significant drop in promotional sales observed between CAD P02 and CAD P04 2024, with a 4.5 percentage point decrease in market share and a 1.6 percentage point drop in promotional pressure.
Performance of Promotional Investments
Although promotional activities have generally decreased, the Share of Market/Share of Voice (SOM/SOV) index remains above 100, indicating that promotional investments continue to outperform other consumer goods categories. However, this index has dropped by 14 points to reach 1286, suggesting ongoing adjustments in promotional strategies.
Adoption of Innovative Promotional Tactics
In response to the new regulatory environment, brands and retailers are adopting innovative promotional tactics. There is an increasing focus on unit discounts, such as immediate discounts and discount cards, to maintain the appeal of offers without exceeding the 34% cap. Additionally, front-page promotions are evolving to highlight perceived added value rather than discount percentages.
Diversification of Promotional Strategies
Promotional strategies are also diversifying, incorporating options such as minimum purchase conditions, enhanced loyalty programs, and bundled offers. For example, the beauty promotions in April 2024 demonstrated how discounts tied to a minimum purchase amount can comply with the new law while remaining attractive to consumers.
Importance of Continuous Innovation
As the sector adapts to these changes, continuous innovation will be essential. Brands and retailers that can maximize the impact of front-page promotions and exploit new promotional mechanisms will be well-positioned to thrive in this new regulatory landscape. Focusing on value-added offers will be crucial for success.
Conclusion and Perspectives
The Descrozaille law represents a key moment in the regulation of promotions within the HPC sector. While this transition presents challenges, it also opens new opportunities for innovation and differentiation. By continuing to adapt and innovate, the HPC sector can thrive in an evolving commercial environment, offering exceptional products and experiences to consumers.
For more detailed information and data, download our white paper: “Balance and Innovation: The Impact of the Descrozaille Law on the HPC Sector.”
