Promotions management has always presented retailers with a dilemma: a huge headache but an unavoidable reality of modern retailing. Black Friday, for instance, was once seen as the single most important day in the retail calendar, like turkeys voting for an early Christmas, many retailers have now extended this promotional period to last for up to several weeks. With more complex promotions to manage than ever before, what can retailers do to keep bargain-hungry customers happy while still ensuring the promotional activity adds value?
When the concept of “Black Friday” or “Spring Sales” first landed in British stores, retailers enjoyed a welcome boost in sales. The problem is that customers have now got a taste for promotions and are simply no longer willing to pay full price for anything. Given that the average consumer is unlikely to fork out for an item unless there is at least a 25 percent discount on offer, it’s virtually impossible for retailers to not have some form of promotional activity in place. Ultimately, these promotional events are the monsters that retailers created, now they must do whatever they can to tame these beasts and optimise their approach to promotions management!
According to research, sales of promotional items now actually outnumber sales of items at full price. Given the importance of promotions coupled with the unavoidable disruption that comes as a consequence, it’s vital that retail supply chain teams manage promotional activity effectively.
Put simply: ordering too much stock in advance of a promotion or poor replenishment during a promotion will tie up valuable working capital and could cause high levels of obsolesce at the end of the promotion. Equally, ordering at the wrong time or not ordering enough in the first place will result in lost sales opportunities and disappointed customers.