Retail promotions should focus on price cuts, rather than multi-buys, new research from IRI has concluded.
The data, taken from a study of 85,000 promotions, reveals that multibuy offers actually prompt a fall of 0.01% in category value, while price cuts lead to a 0.17% rise.
Interestingly, convenience stores boast the best performing promotions when compared to major grocery and health and beauty retailers, increasing category value uplift by 2.85% on average.
Private label promotions perform significantly worse than their branded equivalents with private label promotions driving down the overall category sales value by -0.35%.
“With a lack of manufacturer funding, these promotions are draining category value at an alarming rate,” IRI said.
“It seems that promotions are not necessarily driving sales growth as much as the industry expects,” IRI’s analytics programme director Thomas Hall added.
“We do know that promotions play a much bigger role in terms of driving footfall and increased basket size.
“There are also sizeable listing fees paid by manufacturers for promotions, display space and preferential listings, which help to offset some of the sales revenue losses.
“This always needs to be taken into account when looking at how promotions help retailers grow,” he added.
No comments yet