2 February 2016
Retailers have a problem: traditional pricing and promotions practices are not working.
It’s not for lack of trying, for the signs are everywhere. Seasonal sales. Coupons. Special offers. Television spots. Newspaper inserts. Direct mail. Online ads. Website deals. Social media campaigns. Email interactions. As a group, these efforts fail to produce. Globally, 59% of retail promotions do not break even, according to a Nielsen study. The results are worse in the United States: 71% of promotions do not pay off. When researchers at RSR asked retailers to rate the effectiveness of their pricing programs, 68% said the initiatives were “somewhat effective” or “not effective at all.” Even so, many retailers strive to beat competitors’ prices in a money-losing effort to win customers.
The result is a race down a pricing vortex. And it’s all happening at a time when customers have more access to price information — online and via their mobile devices — than ever before.
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