Dive Brief:
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Most retailers do not have the capabilities to leverage much of the information they have collected, according to analysis by The Boston Consulting Group, a consultancy that works with retailers.
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Promotions are a key area where efforts are wasted, according to the group. While heavy promotions often lead to sales, most retailers don’t understand clearly how they’re really working. 30% to 50% of promotions don’t help sales and margins, and some even lower profits without leading to more sales.
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Pricing zones aren’t necessarily working for retailers anymore because consumers notice differing prices at neighboring stores and shop accordingly. Better to have more, not fewer, pricing zones, even to the point of individualizing prices through loyalty programs.
Dive Insight:
Collection and analysis of a retailer’s data must be translated into concrete action in practical matters, including how long a promotion should last, how promotions should be structured, and when to end promotional deals. As retailers get more adept at collecting information, they must take care that they are analyzing and applying it to the best effect. Otherwise, retailers are throwing sales and promotions at their customers without a solid clue about how they're working.