2023 & Beyond: What’s in Store for Promotions
A retail buzz phrase we heard and read often in 2022 was, “The future of retail is here”.
Leading retailers today are investing in innovative strategies to ensure they not only stay ahead of the competition but continue to meet their customer’s ever-changing needs.
With tier-1 businesses paving the future, retailers feel the pressure of investing in advanced technology to propel them forward. But where do they get started? What solutions should they focus on?
One area in particular that has gained popularity is promotion management. Retailers across all sectors such as grocery, wholesale, and hardlines are seeing the direct value it brings to their business when they run effective and intentional promotions.
Throughout the article discover the current challenges retailers face with promotions, how leading retailers have overcome promotion challenges, and what is in store for promotions in 2023.
Overcoming Promotion Challenges
Promotion management for most retailers is a challenge to coordinate from start to finish due to the current processes, collaboration, data, and policies. Here are a few pain points we’ve noticed:
- Multiple systems & confusing collaboration
- Inadequate data & insights
- Not aligned or linked to financial targets
- Stuck with current processes because traditional software vendors can't support them
So, how do retailers effectively analyze, plan, optimize, and forecast promotions? Here are a few trends top retailers are investing in to enhance their promotion success:
1. Centralizing systems & data
Centralizing data in a single system allows for:
- A single view of price, cost, promotions, and events
- Coordination of promotion decisions with price changes
Collaboration across merchandising and marketing teams
2. Data-driven decision making
Leveraging data for decision-making allows for:
- Data-driven business strategies based on past performance and forward-looking trends
- AI-driven decision-making based on defined business objectives
- Elimination of unnecessary and unproductive promotions based on predictive insights
Investing in personalization and targeting can result in:
- Maximizing customer engagement
- Increasing basket value and expanding product mix
- Collecting and learning from customer behavior data
4. Vendor collaboration
Moving away from emails and excel, and instead towards a vendor collaboration portal allows for:
- Efficient communication of vendor cost and funding decisions
- Increase in negotiation leverage with projected performance and funding alternatives
- Support for retailer and vendor-initiated promotions and events
2023 & Beyond
2023 will be a year of change and innovation for retailers. Particularly with promotions, we will notice a shift in strategy to both compete with retailers and incentivize customers.
Strategies we predict retailers will implement in 2023:
- Coordinate pricing and promotion decisions to increase executional efficiency and intentionality
- Increase collaboration across merchandising and marketing
- Implement consistent promotion across channels as the rule while deploying channel-specific strategies as the exception
- Create less but more efficient and effective promotions with AI
- Incorporate promotions into the customer experience using mass and targeted marketing vehicles
- Create better processes for managing deals to funnel investments into products that meet their customer's needs
- Leverage analytics to support negotiations with vendors for promotional funding
Because of the above strategies, retailers are showing interest in collaborative software that allows all departments (pricing, marketing, merchandising) to work together to build an effective plan for their promotions, planning, deals, and regular prices.
This one source of truth allows retailers to better negotiate deals that help them meet customer needs as well as their company objectives.