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Demand & Supply Chain Management Evolution

Document Detail
Language: English

Why 50 percent of promotions lose money


Company: BlueYonder
Tag: Promotion
Supply Chain Allignment

One thing the Great Recession accomplished was to permanently change consumer attitudes toward price and promotions. Consumers have come to expect a ‘deal’ on every item they purchase.Retailers have responded with a surge in promotions, half of which lose money because they are not well planned and targeted. Here is what you can do about it.

One thing the Great Recession accomplished was to permanently change consumer attitudes toward price and promotions. Consumers have come to expect a ‘deal’ on every item they purchase. As a result, the increased use of promotions that retailers used to survive the downturn has become a permanent fixture of revenue plans. Even eight years after the 2007 recession began, RSR Research found that the biggest pricing challenge retailers experienced was the increased price sensitivity of consumers, although the increased pricing aggressiveness of competitors and price transparency made significant gains in 2015 compared to previous years.

The problem, however, is that despite the importance of promotions to retail success, approximately half of all promotions fail to generate the overall revenue lift intended, either losing money directly through improper pricing or cannibalization, or through lost opportunity from poor item selection, ineffective marketing or failures in execution such as insufficient inventory. The question is: What can you do about it?



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