By Iain Watson, Predictix
Promotions continue to gain importance as retailers compete for consumers' limited attention and pocketbooks. Close to 40% of sales for some retail segments are now promotions-driven. This is not entirely surprising, as promotions have always helped generate excitement, drive traffic, and lift sales. Yet as retailers have relied increasingly on promotions, not getting them right has exacted a high cost.
Promotions can create multiple problems for retailers. These days, promotions feel a bit like a 24-hour news channel: "all promotions, all the time." Constant promoting desensitizes consumers and conditions them to buy only on promotion. This creates a dilemma for retailers, since no retailer wants to run the risk of being the first to scale back. As promotions multiply, it's all too easy for conflicting promotions to cancel each other out or else be combined in unintended ways to create "great" deals that retailers never anticipated — to the dismay of retailers and the joy of the Web-savvy consumers who swap tips about these deals on the Internet.