Promotions in many retailers have traditionally operated on a three weekly cycle. This worked well in the past but with a much greater percentage of revenues coming from promotions this needs to change.
The main business issue is cash flow. Promotions can cause major spikes in cash flow, both up and down. With anything from 20% to over 50% of UK retailers’ revenues coming from promotions this spiking needs to be smoothed out.
What about customers?
From a customer’s point of view three weekly promotional cycles are too long. Customers have become used to the fast pace of ever changing offers from on-line sites. Retail stores therefore need to be more agile to retain their attention, encourage more repeat visits and make shopping more exciting.
What do Marketing think?
Retailers’ Marketing teams feel increasingly constrained by a three weekly promotional cycle. It limits their opportunity to rapidly modify promotions based on sales volumes or competitive moves. They want change.
So what can be done?
A lot of the retailers that we talk with have recognised the problem and are starting to do something about it. Many have decided to move to a strategy of rolling weekly promotions in several major categories, or even store wide. Often they are planning to phase it in as quickly as possible because of the business benefits to cash flow and customer engagement.
Several retailers are going a step further. They are moving from a three weekly promotions cycle to a solution that can launch or change any promotions daily or even more frequently. This approach also has the advantage of being an important step in creating an Omnichannel environment.
If you are evaluating shortening your promotional cycles it might be useful to also look at our NetTickIT software.
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