Outdated approaches costing retailers as value-seeking shoppers fuel $1T in promotional sales
LAS VEGAS, Oct. 7, 2024 /PRNewswire/ — With pricing and promotions becoming more critical in today’s market, a new report from RELEX Solutions and Incisiv provides an in-depth look into the current state of pricing and promotions in the retail sector across the U.S., U.K., France, and Germany. The study highlights the increasing importance of strategic pricing and promotional strategies as both retailers and shoppers navigate an economically challenging landscape.
The report, based on a survey of 179 retail executives, underscores the growing pressure on retailers to adapt to heightened price sensitivity among consumers. Findings indicate that 93% of shoppers now demand more value from their spending, with 84% stating that price is a crucial factor in their purchasing decisions. In response 87% of retailers used more aggressive discounting strategies to maintain sales volumes and customer loyalty.
Key findings from the report include:
Promotions drove $1 trillion in sales in 2023:
With economic uncertainty, rising inflation, and shifts in shopper behavior, promotions became an essential tool for retailers to attract and retain shoppers in 2023. 87% of retailers anticipate maintaining or increasing promotional efforts in 2024.
Only 12% of retailers are using advanced analytics:
Only a small percentage of retailers are using advanced, data-driven approaches (real-time data, advanced algorithms, and AI) to power their pricing and promotions. The lack of adoption impacts retailer agility in responding to market changes and changes in shopper behavior.
#1 challenge impeding maturity is data quality and integration:
Without accurate, unified data, retailers cannot effectively optimize their promotional strategies. Cultural resistance is the #2 challenge in improving maturity.
37% of retailers use spreadsheets to manage promotions:
Retailers are using spreadsheets and legacy systems to drive execution, which lack the agility and integration needed to respond to changing market dynamics with speed and precision.
The study emphasizes the need for retailers to break down silos and integrate their pricing and promotional capabilities. Unifying pricing and promotions and moving to an effective technology stack, the report estimates that retailers could achieve an additional $450 billion in incremental sales.
“Consumers today are more aware of and motivated by prices than ever before. Retailers must evolve their pricing strategies to not only respond to this demand but to lead with tools that are faster, smarter, and more integrated across their entire operation,” said Jeff Bulger, Strategic Principal, RELEX Solutions. “Effective pricing is no longer just an option—it’s a critical driver of both customer loyalty and profitability in today’s retail landscape.”
“What got retailers here won’t get them much further. Driving $1 trillion in sales on the back of outdated analytics and technology platforms highlights the immense growth potential that’s possible,” says Gaurav Pant, Chief Insights Officer at Incisiv. “The path forward isn’t just about technology; retailers also need to overcome cultural inertia and unlearn years of legacy behavior.”
RELEX will share these insights at Groceryshop 2024 (October 7-9, Las Vegas, Booth A610) and at the 7th Annual RELEX Grocery Forum (October 8-10, Barcelona), providing opportunities to discuss the findings and explore AI-driven solutions.
The full report can be downloaded at 2024 Current State of Pricing and Promotions in the Retail Sector!
About RELEX Solutions
RELEX Solutions provides a unified supply chain and retail planning platform that aligns and optimizes demand, merchandising, supply chain, operations, and production planning across the end-to-end value chain. We help retailers and consumer goods companies like ADUSA, AutoZone, Coles, Dollar Tree and Family Dollar, M&S Food, PetSmart, and The Home Depot drive profitable growth across all sales and distribution channels, leading to higher product availability, increased sales, and improved sustainability.
Learn more at: https://www.relexsolutions.com/customers/
About Incisiv
Incisiv is a peer-to-peer executive network and industry insights firm for consumer industry executives navigating digital disruption. Incisiv offers curated executive learning, digital maturity benchmarks, and prescriptive transformation insights to clients across the consumer and technology industry spectrum.
incisiv.com
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SOURCE Incisiv
