A large number of retailers have realised that having too many promotions has been harmful to their business and their relationships with their customers.

Why promotions cost retailer so much money

The big impact from a retailers perspective is the effect on profitability. This is not just due to reduced prices in the promotions but also the high additional logistics costs of managing dramatically changing and often unpredictable product volumes. This can be on products in the promotion and also with competing products that are not on promotion.
There is also a big cost in stores to deal with customer queries about promotions and ensuring that the signage is up to date and accurate. From the perspective of the store staff often their biggest frustration is simply trying to find the most up to date promotion signage amongst a sea of similar looking signage.

Why customers don’t like promotions

It’s easy to think that customers will like any promotion – they don’t. In fact they are getting increasingly frustrated and cynical about promotions. For example a three for two promotion may look good to a shopper who can use three units but the shopper who can’t use or afford three units gets frustrated at what they now perceive as the high price of a single unit.  If a promotion is misleading or unclear shoppers loose trust in a retailer which leads to a poor customer experience and may even result in them ceasing to shop with that retailers.

Promotions can be great for retailers and shoppers

Promotions are a very important and valuable part of retail for shoppers and retailers. The big problem is over-use. What shoppers want are clear and simple promotions that they can feel good about and that improves their shopping experience. If a promotion does not achieve these two criteria I’d advise retailers to either change the promotion or stop it. A key feature that does not get the focus that it deserves is that not every promotion needs to be about price.
The big advantage of promotions for Buying and Marketing teams is that they are able make shoppers aware of new products, increase sales, sell slow moving stock and give shoppers reasons to buy and to keep returning to see new promotions. Promotions give shoppers the opportunity to feel good. This can be by getting a “bargain” but also discovering a product that they will enjoy that’s adds value to them.

What’s stopping retailers doing better promotions?

In some cases it’s because they haven’t fully considered all of the advantages and disadvantages of promotions or simply that their existing signage system does not have the required flexibility to implement smart promotions.  Smart promotions need a smart signage management system which is easy to manage, simple to use, quick and easy to change and offers flexibility on a store by store basis.  This is exactly what NetTickIT from Pierhouse was designed to deliver.