Talk to an Expert

    Refocus on promotional mix over price to win back customer loyalty

    3 min read | By Ed Betts, General Manager – Retail Lead Europe at Retail Express

    Grocery price inflation has hit a record high, resulting in the prediction that households will face an extra £788 on their annual shopping bill[1]. Worried customers have already made adjustments to shopping patterns and cut back on spending. For retail businesses, the financial squeeze caused by product and supply chain pressures means that cutting prices is challenging, yet they are under significant pressure to attract and retain customers.

    Many retailers will be watching the activities of the deep discounters with keen interest, particularly as January figures showed one achieving sales 26.9% higher year on year and another recording a 24.1% jump putting its market share at 7.1% according to Kantar data. Amid record inflation, supermarkets continue to search for alternative ways to offer customers value with a pronounced shift in focus to everyday low pricing (EDLP), comprising price matching and loyalty scheme incentives to help shoppers save.

    But it is notable that the proportion of spending on promotions has recently fallen to its lowest level since 2008. With tight product margins and little wiggle room on price discounts, retailers need to be creative and reconsider a broader, more strategic promotional mix to maximise visibility and maintain margins across the category. For those not looking to position themselves on price discounts alone, creating a buzz beyond price will be key. But which products, where and when?

    Promotion beyond price

    Better product placement within a store often means the difference between an item remaining on the shelf or making it into the basket. The use of premium sales space to promote an item can attract supplier funding for space instore that guarantees extra visibility for key lines and exposure for their brand. But this will call for activity that goes the extra mile and avoids the expected norms.

    Retailers should consider using imaginative stand-out displays and approaches that look to evoke emotions or memories tied to a product. Here we are looking to break repeat purchase patterns and encourage brand switching through high engagement tactics that will excite and entertain. Critically, avoiding low engagement tactics will be key. A well-promoted product could well mark the tipping point in seeing customers turn back towards a familiar item from a trusted brand, instead of seeking an alternative elsewhere based solely on price.

    Once a promotion has been running for a pre-determined period of time, retail teams will need to ascertain its level of success. There are three elements to consider here: firstly, looking at data to see how the product performed historically; secondly, considering what’s currently happening using real-time sales tracking; and finally, determining the action to be taken next and how this will impact on performance. Proper planning in relation to promotions is essential and requires a critical workflow path. System generated promotional and marketing plans offer full visibility, helping to identify which products are being promoted, the marketing activity around them, and who is responsible to ensure that nothing is missed.

    A dedicated AI solution driven by data

    Retailers now need to carefully consider the tools at their disposal. Intelligent merchandising software, driven by artificial intelligence (AI), can reveal optimum product placement to identify those which will give the best return on investment. AI-driven forecasting can determine how a product should perform based on previous marketing and promotional data, rather than guesswork.

    Intelligent merchandising software can also reveal how well a product performed at different price points and identify the marketing activity that was used to support it. A forecast can be generated accordingly to show the ideal promotional mix for creating the right buzz. Additionally, virtually calculating profit and loss (P&L) becomes easier due to the ability to consider past, present and future activity. Through data-driven insight around each product, retailers can be confident in creating a winning promotional mix across their key lines that puts them in good stead for the future.

    To learn more visit:


    Read more in our article featured in 365 Retail.

    More from Uncategorised

    Download Whitepaper