How to Redefine a Successful Retail Promotional Strategy During COVID-19
With the right mindset, stores can shift their retail promotion strategy to achieve results and drive profit during COVID-19.
There’s no doubt that the evolving situation surrounding the pandemic has created a unique challenge for numerous retailers. One area that’s proving to be quite challenging is retail promotional strategy. Numerous elements are being impacted by this new reality. Although uncertainty remains surrounding retail in the coming months, one thing that’s certain is that the retailers that will better weather the storm are the ones who use this as an opportunity to re-evaluate their promotional approach moving forward.
Even before COVID-19, most retailers ran a lot of inefficient promotions. So just the fact that a lot of their promotions were already inefficient put them even more at risk once the pandemic hit. One of the reasons why traditional promotions don’t work is because retailers often run the same (sub-optimal) promotions they ran the previous year. If you think about the incessant forecasting and re-forecasting culture of retailers and merchants, there’s a risk aversion to doing the same thing over and over that can provide an easier forecast but a false sense of security. If business is up 2% this year, it can make it easy to figure out what’s going to happen if the same promotion is ran as the previous year. But just because it’s easy doesn’t mean it’s most effective, and the retailers who were running ineffective promotions prior to COVID are even less optimal now that the market has changed.
Regardless of how robust a retailer’s promotional strategy was prior to COVID, this is the time to start making the right adjustments to come out stronger than before and re-design their promotional effectiveness for the future.
Skate to where the puck is going and not to where it is
Demand is shifting on products as consumers begin to adapt even more to new realities that weren’t conceivable six months ago. What will a COVID back-to-school look like? What will a COVID Black Friday or Halloween look like? In March when people were panic buying toilet paper and sanitizer, they weren’t thinking about men’s clippers and home workout equipment, but those things are growing now. What is the next big thing in our new reality? Promote that.
Get started by investigating and leveraging evolving global trends coupled with analytics to identify where to invest in future promotions.
Trust the data and analytics
Retailers using advanced analytics and promotion optimization solutions are at a large advantage because they can dynamically process and evolve as the market does to new realities. Promotional analytics also provide an extra data point – if a promotion was not effective before COVID and the sales of those items haven’t gone up during COVID, it‘s pretty safe to assume that repeating that promotion in the coming months is a bad idea.
Start by conducting an item strategy and promotion performance analysis and identify which promotions were effective and ineffective in the past. Leverage these analytics and new trends to identify how to promote in the future. Perform a market basket analysis to determine new affinities that have emerged as the market has evolved due to COVID. This also leads to more effective planning and promotional excellence.
Consider your channel strategy
One clear outcome of the COVID crisis is the shift from traditional B&M shopping to delivery and online purchases. Another new reality are new regional realities based on legislative re-openings, disease risk and other factors. Now is as good of time as ever to re-consider your promotional channel strategies. What role does online play vs. B&M displays and traditional flyers? How should your promotional versioning change during this new reality?
Take action by leveraging AI or analytics to better evaluate changes in channel and regional behavior and create solutions to execute improved regional and channel based promotional strategies.
Planning promotions take a lot of time for many retailers and often translates to six or more months of creative design, product selection and pricing. That was inefficient before COVID changed market demands drastically. Now it’s simply devastating to have a protracted, cumbersome process for planning and executing promotions. New realities are happening every day and the retailers who are able to seamlessly adjust and plan promotions are the ones who will gain share in the coming months. AI capabilities with advanced pricing platforms are even more critical in this new, dynamic promotional reality.
The best place to start is to leverage a promotions management and optimization with dynamic AI capabilities that enable retailers to become nimbler during this critical time in retail. Strategic consultants can also help organizations design the processes and roles to become more efficient and drive more value.
Build the foundation for tomorrow
While it’s critical to ‘manage the crisis’ during COVID-19, the best retailers are laying the foundations that will make them even more effective once COVID-19 is over. Now is as good of time as ever to start investing in the advanced capabilities that will enhance promotional effectiveness for years to come. Cloud based AI platforms are particularly good investments as they can be implemented remotely and drive high immediate ROI for retailers while enabling the nimbleness and analytics mentioned above.
Retailers who consider the above and proactively re-evaluate their promotional effectiveness with the right investments today will be strongly positioned to succeed in the years to come. Revionics can support retailers on this journey with numerous advanced promotional analytics and solutions and all of the retail depth and expertise to ensure that your promotions become and remain best-in-class.