Retail Sales Promotions Challenges And How To Overcome Them


Promotions are nothing new.  From the beginnings of commerce, centuries ago, those with wares to sell have found ways to entice buyers and best competitors, whether through barter, bundling, or discounted pricing.  In truth, the basics of retail promotion haven’t changed much over the years, although our methods and strategies have certainly become more sophisticated.

With so many variables in play, not the least of which is the whim of the consumer public, it can be difficult to predict the outcome of a given promotional strategy, and this can be understandably stressful for retailers looking to move product and maximize profit.

You probably wish you had a magic ball to tell you which promotion strategy is most likely to help you reach specific goals, or how to best promote goods for optimal market saturation and maximum profitability.  As it turns out, evolving technology can help you here.  Let’s look at some common goals, examples of promotions, and how advanced predictive analytics and AI technology can help retailers.

The Goals of Retail Promotions

Promotions are distinct from, say, permanent markdowns or end-of-season sales meant to eliminate inventory.  The temporary nature of price changes or other enticements is what defines a promotion, and as such, the primary goals for promotional outcomes tend to be short-term.

Of course, it’s important to understand exactly what a promotion is.  Promotion could be broken down into a number of categories, but we’re talking about sales, or retail promotion.  This centers on stimulating sales with activities like discounts, deals, contests, giveaways, and other temporary incentives to elevate awareness and demand for specific products.

When you plan sales promotion strategies, you probably want to accomplish one or more of the following objectives:

  • Increase product sales
  • Expand market share
  • Increase brand awareness
  • Drive foot traffic
  • Cross-promote (split expenses and gains with vendors or business partners)

How can you best achieve the desired results with promotions?  This is the million-dollar question, and until now, it has involved a measure of speculation and more than a little dice-rolling.  Simply relying on past promotions will not yield expected results as there are too many factors that will change year over year. 

Retail Promotion Types

There are several types of promotions to consider, and the strategies you choose will depend on the product you’re promoting and your specific goals.  Some sales promotion examples you may want to consider include:

Temporary Discount

Promotional discounts involve reducing price by a percentage, say 20% off specific products, to increase interest and stimulate sales.

Temporary Price Reduction

Similar to a temporary discount, you can reduce the price of a product by a specific dollar amount, rather than a percentage.

BOGO and Multi-Buys

Consumers love to get something for free, which is why buy one, get one (BOGO) and multi-buy (buy two, get one, for example) promotions are so popular and effective.

Financing Options

Big ticket items can be a hard sell, even if they offer a lot of value.  Providing financing options that require only a small down payment and space out the remainder of the cost can diminish the sting of a large expense.  A buy now, pay later option is appealing to many consumers on a budget.


Getting money back is always appealing.  Products that come with rebates are like a gift that keeps on giving.

Free Samples and Contests

Coca-Cola became the company it is today by offering the very first coupons.  These coupons could be exchanged for a free glass of soda, and they ultimately got the country hooked on the brand.  Takeaway: free samples work.


Saving money by purchasing multiples of things you’ll use anyway?  Seems like a sound purchasing strategy, and one that sways many consumers to buy more product now.

Challenges with Promotional Success

There are several challenges inherent to promotions, starting with the fact that not every product is going to garner the same results as a result of promotions.  For example, certain products are associated with prestige, and offering discounts or bundles may diminish their value in the eyes of consumers, stunting sales rather than enhancing the perceived value proposition for consumers.

The more pressing concern for retailers, however, is the question mark when it comes to uplift, or the potential increase in demand for the product during the promotion period.  With no real way to gauge the possible success of a promotion, it’s difficult to predict ROI with any accuracy. 

There’s also the problem of integrating promotions with inventory management. Preparing for promotions means calculating the amount of inventory needed in stores to meet increased customer demand.  If you have too little, consumers excited about the promotion could have an unsatisfactory experience with your brand.  If you stock too much inventory and the promotion fails, you could be left holding the bag on inventory that now needs to be discounted even further to move it. The collaboration between marketing and inventory management is something many retailers struggle with.

Promotional cannibalization is another potential drawback.  If you have two items that are similar and you drop the price on one as a promotion, it’s only natural to see preferential purchasing of the discounted item.  Unfortunately, this could result in loss of sales and revenue of the regularly priced item, leaving you with overstock that you somehow have to move at the end of the season.

There is good news, though.  Many of the most common retail promotion challenges can be addressed with the use of retail AI & predictive analytics.

AI and Predictive Analytics in Retail Promotions

Choosing the right sales promotion methods begins with understanding the benefits of AI and predictive analytics software.  There are a lot of strong benefits in using this technology to perfect promotions in your retail business, including:

  • Accurate demand forecasting across your business, down to the store and product levels, including future promotional uplifts.
  • Increased collaboration between promotions and inventory management.
  • Multi-variate analysis of influencing factors such as timing, pricing, demographics, seasonality, inventory, vendor lead times, and more
  • Recommendations for optimal media types for each product/store.
  • Suggestions for optimal promotional strategies to reach your goals and maximize ROI
  • Users can analyze different scenarios to make informed decisions before investing in promotions

With robust and comprehensive systems that account for the complexities of sales promotions you don’t need a magic ball – with predictive analytics you can see the future outcome of any given promotion. 

Contributed by Yan Krupnik, the Director of Business Development at Retalon, an award-winning provider of retail predictive analytics solutions for planning, inventory management, merchandising, pricing, and promotions. Retalon’s solutions are built on one unified platform to account for all factors influencing your business. Learn more at

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