Leveraging the Pricing/Promotions Value Unlock: Meeting Customer Expectations While Improving the Bottom Line

2025 is racing ahead and while the price of eggs continues to blow through all expected price limits, retailers have been able to stem the tide on double digit price increases across most of their other products.  Pricing and promotions have long been important to a grocer’s strategy but in 2025, a more mature approach will become critical to compete.   Why?   Consumers are smarter and have more tools to seek the best promotions and prices, and your competition will be leveraging new tools to improve their bottom line while serving their customers better. 

Grocery Doppio’s sister company, Incisiv, released a research report

 (Why Retailers Need to Integrate Their Pricing & Promotions Capabilities.) 

 last quarter, detailing the state of pricing and promotions maturity and where value can be gained.   Respondents heard loud and clear from their customers that price matters, as 72% stated their customers have become more price sensitive in the last 12 months.  In addition, 87% of retailers stated economic conditions impacted their promotional strategies.  I know, I know, you can call me Captain Obvious for publishing the above statistics.  However, they do set the tone for why it’s more important than ever to prioritize pricing and promotional strategies.  We all know margins are thin.  So if the opportunity exists to gain an average of 4.5% of incremental sales by implementing a modern pricing and promotions engine, shouldn’t every grocer jump on it?

Legacy and culture would suggest otherwise.   The average age of promotions solutions is 7.8 years and for pricing solutions, it’s 6.5!  We all know how fast technology moves, so those numbers are startling.  In addition, globally, 37% of grocers are still using Excel for the promotions ‘solution’ - Not exactly cutting edge.  Culturally, ‘internal resistance to change’ was cited by approximately 57% of grocers as the major challenge in improving pricing & promotions maturity.  

Getting to pricing and promotions nirvana is also not as easy as putting out an RFP and selecting a vendor.   It requires planning, both from a technology and an organizational perspective.  First, there’s the data problem.  Fragmented data from multiple sources, including online and offline sales, shopper behavior, and market trends, creates silos that limit promotional effectiveness.  It’s by far the biggest challenge grocers face (62% of grocers stated this in the study).  Clean data that can be integrated into the appropriate systems is really the only way to maximize the effectiveness of pricing and promotions solutions (any solution, really…).  Break down the data silos that exist to gain a clear view of your organization’s opportunities.  Companies like Kroger, Amazon Fresh and Pricesmart are utilizing their shopper data to be able to better personalize their promotions to their customers.   The same can be said for organizational silos.  By adopting a ‘one-team’ approach, companies operate better and can innovate faster.   

Finally, as the great Peter Drucker said, ‘you can’t manage what you don’t measure’.  Unfortunately, few retailers measure their promotional performance regularly, leading to missed improvement opportunities.  It was cited by ~43% of grocers as the biggest challenge to advancing pricing and promotional effectiveness.  If grocers can establish a closed-loop measurement system for continuous learning and adjustment, it will better enable trust in the metrics and help retailers to refine pricing and promotional strategies based on actual performance data. 

In addition, by establishing regular and formal measurements, it will create greater transparency and grocers can make more, timely adjustments, and enable more efficient allocation of budgets.

If you'd like to learn more about this study and hear from pricing/promotion leader, Pricesmart, we are producing a Webinar on March 20 at 12 pm ET. Register Here.