How can we effectively compete with retailers that run double the number of in-store promotions that we do?

One way to improve promotional decisions is through better analysis of customer behaviour. Last year Sainsbury’s chief executive Justin King said some retailers were offering “ever more promotions” because they lacked the ability to tailor offers to particular customers.

Close analysis of data from its loyalty card scheme, Nectar, has helped inform the grocer what its customers want, how its promotions are performing and how best to use them to meet customers’ needs. As a result, it has been able to cut its promotional budgets.

Susanna Moan, business unit director at LMG, which owns Nectar, says: “Millions of pounds are spent on promotions each year, but  some of this is ineffective spend. Retailers need to know which promotional mechanics work hardest.”

She adds that offering 3-for-2 on 10 packs of oranges, for instance, requires the customer to take home too many perishable goods. “Customers are looking for help in keeping the cost of staple household items low, so price cuts on cleaning products or multi-buys on kids’ lunchbox items will go down well.” 

Moan adds there are other ways to reach customers that help build lasting relationships, including direct marketing, email and mobile. “It’s about competing on quality of promotions, not quantity,” she says. “Engaging your buyers with genuine insights about your customer and their consumer will only ever be a smart investment.”