Promotions: Expectations vs. Reality

EXPECTATION: Retailers expect brands to submit 3-4 promotions per year at a net discount of 20%-25%. Additionally, they expect their promotional fees to be paid on top of the net discount. Lastly, they expect to see a sales lift of 15-20% during the promotional period.

• REALITY CHECK – Participation = partnership! The more willing a brand is to participate and meet or exceed the set promotional requirements for a retailer, the stronger their partnership becomes.

EXPECTATION: Brands expect the full discount to be passed on to the customer and that all promotions are executed at every store.

• REALITY CHECK – Certain retailers do NOT pass on the full amount due to additional costs that need to be covered for promotions. Hanging promotional shelf tags is a common labor cost that the retailer covers and is sometimes included in the cost of the promotion. Be sure to discuss with the category buyer when mapping out an annual promotional plan.

EXPECTATION: Brand expects a big boost in product shipments during the promotional period and that their sales will increase dramatically. (i.e.,there are multiple orders during promo period).

• REALITY CHECK – A brand should be prepared by looking at previous data to predict how much sell through should happen. If it is a new retailer, the rule of thumb to follow: Sales lift during a promotional period should be between 10-15%.

EXPECTATION: Retailer and Distributor will only bring in enough product to cover a given promotional time period.

• REALITY CHECK – A retailer will buy product based on their data for prior promotions. However, be aware that bridge buying happens at distributors and retailers alike during a promotional period. This means that a distributor or retailer may purchase product to sell through non-promo months. This happens primarily with center store and shelf stable products.

EXPECTATION: There will be a sales lift after the promotion.

• REALITY CHECK – Depending on the category, product ordering maybe reduced the month after the promotional period.

EXPECTATION: Brands expect retailers to pitch in to hit a specific promotional discount.

• REALITY CHECK – Retailers have set promotional margins they must hit. There is little wiggle room. Going in with an organized year plan that meets or exceeds expectations set by the retailer is key.

EXPECTATION: Brand will hit a set MSRP using a promotional vehicle.

• REALITY CHECK – The Retailer always controls the pricing.