How agile promotion planning increases forecast accuracy, reduces ineffective promotions and more

There are a lot of reasons why retailers lose when it comes to the promotions game, but lack of awareness around how to change this “optional reality” shouldn’t be one of them.

Agile Promotion PlanningWe all know that promotions are an important vehicle for retailers – on average, 40% of traditional grocery sales come from promoted items. Weekly flyers – be they traditional paper or online – are still a critical tactic to drive store traffic and basket size. But promotions are expensive. Retailers spend an enormous amount of time and money – hundreds of millions of dollars a year for most retailerscollaborating with CPG manufacturers / suppliers to invest trade funds in discounts and merchandising. And this is in addition to any markdowns the retailers fund themselves.

Yet, despite all the investment, research shows that 30-40% of all promotions are ineffective.

Why are retail promotions ineffective?

  • Merchants and CPGs / suppliers often lack the cohesive system – from data and forecasting to reporting and analytics – and processes needed to accurately plan, execute, and evaluate, promotions across brands and categories or markets and banners.
  • Overwhelming data inputs – the sheer volume of data inputs, merchandising tactics, or decision points required to create a robust plan – such as historical performance at store and SKU level, price, feature, display, multiples, allowances, and so on. In many cases, these permutations lead to nearly a billion decision points to consider – far too many for a single merchant to manage – or even a skilled (and costly) team of hundreds of analysts or vendors.

Because of these constraints, retailers often end up repeating last year’s plan in an effort to “do no harm.” But forget about being able to take a true omnichannel approach when you’re using Excel and SQL to develop the weekly ad – that’s simply not a formula for sustainable growth in today’s hyper-competitive environment.

Agile promotion planning connects the dots

Agile Promotion Planning allows retailers to combine AI and Machine Learning with their expertise and experience to maximize efficiencies and minimize inefficiency. With Agile Planning Promotion, they:

  • make collaboration and planning processes more efficient
  • improve forecast accuracy
  • eliminate ineffective promotions
  • optimize trade spending
  • achieve category and department objectives
  • and ultimately drive significant – profitable – sales growth.

A progressive maturity model for agile promotion planning

For most retailers, getting to Agile Promotion Planning will be a multi-phase journey, with incremental progress and impact made along the way. But to understand where you’re going, you must first understand where you’re at, and our Agile Promotional Planning maturity model can help with that assessment. As we walk through this model, we will uncover and discuss key characteristics, processes, and technology enablers along each step in the journey.

As retailers move along the maturity scale, they will evolve from merely answering the question “what happened?” and be increasingly able to understand why it happened, what might happen if changes are made, and – ultimately – to a decision on what should be done — with extreme confidence and in real time.

More to come…

In part two and three of this blog series, I’ll cover the four stages of the maturity model and the benefits along this path for retailers.

For more information on Agile Promotion Planning, check out our Buyer’s Guide: 4 factors to consider when selecting a promotion planning and evaluation solution.

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