Why are so many retail promotions wasteful? Many retailers are asking themselves that question, and with good reason. From 30% to 40% of retail promotions not only are either inefficient or unprofitable, but also risk alienating consumers by overwhelming them with choices that make shopping harder. These inefficiencies have two primary causes:
- Too Many Promotions. It sometimes seems as if everything is on promotion, everywhere, and targeted at everyone. In this saturated landscape, promotions cannibalize each other, while consumers seek simpler and more personalized offerings. In March 2023, we surveyed approximately 1,000 consumers to understand their perspectives on retail promotions—and about 60% of respondents said that they would prefer to receive more relevant promotions instead of just more promotions.
- Too Much Short-Term Focus. Many retailers look at promotions only through a tactical lens. An overemphasis on day-to-day work, coupled with intense pressure to meet sales and share goals, can spur promotion teams to focus on introducing short-term corrections to a system that isn’t optimized for long-term success.