While retailers may achieve increased volumes of sales on these items, they should also consider the wider issues. For example, they run a very real risk of cannibalising other product ranges as well as potentially missing the 'halo' opportunity for additional product sales.
While a two-for-one offer on a leading diet beverage may lead to a sell-out of these items, the retailer may sell few alternative soft drinks during the period. And if promotional items sell out too quickly, it can leave empty space and detract from the customer experience. Also, don't miss out on placing snacks near to promotional items.
Promotional decisions need to be based on facts and figures. It is only by understanding the end-to-end supply chain, inventory management, product affinity, and store processes behind a promotion, as well as having a firm grasp of the historical trends around such promotions, that retailers can make smarter decisions that deliver bottom-line results. By having full visibility across the whole retail chain, promotions can be managed and risk-mitigated.
Donal MacDaid, VP supply chain, Aldata