Retail promotions represent one of the biggest challenges in retail! Deep promotions once reserved for holidays, occur year-round as retailers battle for thrifty discount-trained shoppers. Retailers are driving traffic but often at the expense of margins.  See Wall Street Journal article, The Tricky Math of Black Friday Bargains.

 The proliferation of promotions has reached unmanageable levels, and “it will get even crazier”, according to Market Track.  Is “dollars off” or “percentage off” more profitable? Is it 20 percent, 30 percent, 40 percent or more off? Is it buy one get 50 percent off the second item? It is $10 cash for every $50 spent, or $20 for every $100? Or is it a simple roll-back? When do “stackable promotions” make sense?

Then there are retailervendor deals. Historically, merchants would get together, look at vendor deals – if available – and decide promotions based on deals and then pass along the discount. Question: Are the deal items the best candidates for promotions, and should 100 percent of the manufacturer discounts be passed through to the customer?

 These are the questions on retailers’ minds. The common thread is what promotions on which products across which channels – in total – will drive profitable traffic, protect the brand image and retail margins? And what about the shopper experience – has it become so complicated that your shoppers have lost confidence in the brand? Retailers need more pricing intelligence!

 You might have guessed that we would once more advocate for retail science and pricing optimization software in providing a more precise, data-driven approach to promotion planning and execution. In the fifth video in our series we discuss how retailers can identify which products/offers are the best revenue drivers; which are the best profit drivers and how to balance the tradeoff – so retailers can drive sales without eroding margins. Watch the video

Promotion pricing technology has evolved. It needs to be integratedcross-channel and cross-merchandising so retailers can manage demand in a more consistent way, drive sales and maintain profits — and make sure those trained shoppers who only visit when they have 30percent off, visit more often!

Additional Resources.

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  1. […] come a long way since its infancy however. Companies like Clear Demand offer a solution called ‘Advanced Retail Pricing Promotion’. Software solutions like this use algorithms which evaluate many factors. These algorithms tell […]