Study finds retailers send wrong promotions at wrong time to wrong customers
More than half of all retail promotions are sent to customers who would be content to pay full price.
That’s according to a new Revionics-commissioned survey conducted by Forrester Consulting, which found that 52% of retailers’ weekly or monthly promotions go to customers who would happily have paid full price, resulting in lost margins that retailers can ill afford.
Revionics’ chief marketing and strategy officer Cheryl Sullivan, along with guest speaker Forrester VP and principal analyst George Lawrie, discussed the study results and implications for retailers at the NRF Big Ideas panel session titled “The Shoppers Speak: Shoppers Bust Long-Held Myths on Pricing and Promotions.” The panel, which took place on Monday, Jan. 15, at the Jacob K. Javits Convention Center EXPO Hall (Room 2, Level 1), also provided retailer perspectives from Luke Rauch, senior director of U.S. insights for Walgreens.
The survey, which questioned consumers in the United States, United Kingdom, France, Germany and Brazil, also debunks retailers’ hope of recouping margins by raising prices on limited-stock items. When asked how they would react if an item they wanted was available at a higher-than-expected price, nearly 60% of respondents said they would wait, not purchase the item at all, purchase it from a different retailer. A retailer seeking short-term gain faces the painful risk of losing sales and the hard-won loyalty of its shoppers.
“These incessant and poorly targeted promotions create a climate of perpetual abundance and undermine the customers’ sense of urgency to buy. Instead of wasting money and resources on indiscriminate campaigns, retailers should focus on personalized and timely promotions,” the study found. “Retailers should use customer insights and data science to design the promotions that are most appropriate for different groups of customers in context.”
Sullivan said she has seen a profound market shift as data science-based pricing and promotions change from “nice-to-haves” to now being “must-haves.”
“This confirms what we found in the earlier study: that today’s shoppers worldwide are incredibly savvy and discerning,” Sullivan said. “Retailers who want to effectively reach their customers with meaningful prices and promotions must embrace a science-based approach now if they want to remain relevant and competitive.”