Is it time for ‘essential’ retailers to stop running in-store promotions?

Discussion
Photo: RetailWire
Apr 07, 2020
George Anderson

Anyone who’s ever read an IRI or Nielsen report knows there are simple and long established steps for maximizing sales in retail stores. 

  1. You must have product on the shelf to sell. The following steps do not matter if this is not the case.
  2. Temporary price reductions (TPRs) on a product will lift sales above just simply having it on the shelf.
  3. TPRs with a secondary display, often an end-cap, lift sales even more.
  4. TPRs with an ad and a display lift sales the most.

The reality at stores classified as “essential” since the coronavirus outbreak has been that a lot of planned sales promotion activity has been paused as grocers and others concentrate on keeping products in stock while keeping associates and customers safe.

A March 26 email from BrainTrust panelist James Tenser identified that stores were pulling back on TPRs and promotional displays. A completely unscientific audit by RetailWire confirms that observation.

On Saturday, Meijer announced that it would temporarily suspend publication of its weekly ad in an effort to decrease customer counts in its stores. The chain of supercenters, based in Grand Rapids, MI, announced its plan along with other steps to protect associates and customers. Meijer operates stores in Illinois and Michigan, two of the hardest hit states in the U.S. to date, along with others in Indiana, Kentucky, Ohio and Wisconsin.

In related news, some are questioning the decision by Lowe’s to go ahead with the chain’s Black Friday sale last week. The sales event promoted in-store only deals on Saturday and Sunday, according to WRTV in Indianapolis.

An unidentified  Lowe’s manager in Indiana sent an email to WRTV to comment on the sale.

“Lowe’s chose to move forward with one of our biggest promotions of the year,” the manager wrote. “I am appreciative of the current steps taken but this alone is socially irresponsible and borderline gross negligence on Lowe’s part in this time of crisis.”

A Lowe’s spokesperson responded to a RetailWire inquiry via email. “While some retailers have taken steps to eliminate value pricing, we recognize the importance of continuing to offer value to our customers in this time of economic uncertainty. Affordability matters now more than ever.”

The home improvement chain announced last week that it was cutting store hours, raising pay for hourly associates and taking other steps to address the threat.

“All Lowe’s stores have signage reinforcing the need for social distancing and we remind customers every 15 minutes with overhead announcements,” said the Lowe’s spokesperson. “Stores also have the ability to limit customer capacity in high-trafficked areas. We also have clear signs and floor markers to reinforce CDC social distancing guidelines.”

A two-week stay-at-home order issued by Indiana Governor Eric Holcomb on March 24 has been extended for two more weeks. Indiana has had over 4,400 confirmed cases of COVID-19 to date with 127 deaths.

DISCUSSION QUESTIONS: Have you noticed a reduction in temporary price reductions, promotional endcaps and ads from “essential” retailers in recent weeks? To what extent is in-store promotion appropriate during the coronavirus crisis? Do you expect retailers will make changes to their post-pandemic promotional practices based on their experience during the outbreak?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is a time when perspective, empathy, and sense of larger purpose should be your guides."
"Well if there was ever a time for retailers to try to break, or at least reduce, the promo cycle — now is it."
"Retailers should be aware of the categories that they are having a hard time keeping in stock and minimize the deep promotions there."

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31 Comments on "Is it time for ‘essential’ retailers to stop running in-store promotions?"


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Mark Ryski
BrainTrust

It’s a tricky balance. Promoting now seems like barking at the moon. Furthermore, as the article notes, promotions to drive traffic into stores where traffic is being restricted or stunted by health regulations just seems like the wrong thing to do. Retailers need to ensure that their promotional efforts don’t appear as though they are taking advantage of the difficult situation. I doubt that this will impact post-pandemic promotional practices.

Suresh Chaganti
BrainTrust
Suresh Chaganti
Co-Founder and Executive Partner, VectorScient
5 months 23 days ago

I’m certainly seeing that promotions are scaled back at Meijer. In fact in at least two categories – chips and bagels – the prices have increased (or, rather, the ever-present promotions are not available). It makes sense that they are not subsidizing the grocery category to attract the foot falls.

David Weinand
BrainTrust

Suresh – agreed. I’ve gotten news from the world’s most cost-conscious shopper (my mother) that prices for things like cookies, chips and others have increased “substantially” in the last few weeks. This may mean 10 percent but, in an era where everyone is watching every penny, it can matter.

James Tenser
BrainTrust

Many shoppers have become accustomed to constant TPRs in some commodity categories — like cookies and milk, for example. When deal prices disappear, list prices may look high to some folks. I have yet to hear of a substantiated case of “profiteering” in the supermarket trade. Retailers are wise enough to know that they must face their customers again after the crisis subsides. Good faith matters.

Zel Bianco
BrainTrust

Given what retailers and their frontline workers have been going through and will for some time, they should suspend many of the promotions and use the extra margin to pay their employees a bonus! Employees are truly putting their lives on the line and retailers deserve our support during this challenging time. After that, I would like to see the promotions go to those that really need them to make ends meet, at least for awhile. Retailers deserve a break.

Jeff Weidauer
BrainTrust

Retailers are forced to walk a line between over-reaction and a tone-deaf response to this crisis. There is no playbook for this mess, but taking a step back and looking at various options is always a good idea. Running a “Black Friday” sale makes little sense if you can’t keep basic products on the shelf. But stopping all TPR activity makes no sense – shoppers still look for deals and want to save money, especially in times of uncertainty. This is a time when perspective, empathy, and sense of larger purpose should be your guides.

Ken Wyker
Guest

I agree Jeff. This discussion is about the possibility that running promotions might make things worse by getting more customers into the store. But the flipside is that any retailer that stops their normal promotions might be seen as taking advantage of the situation to make more profit.

This is a situation where clear communication is key. Retailers want to be seen as responsible and respectful of the situation, but also empathetic to their customers’ desires to save money. It’s a tough situation to navigate with no conventional wisdom for how to manage it best.

Bob Phibbs
BrainTrust

This isn’t taking advantage of anyone but it would encourage people to leave their homes which in NY where I live is highly discouraged. My challenge is, why is it OK for Target and Walmart to stay open because they carry grocery and people can buy hardware, garden supplies, etc. there, but Lowe’s is the bad guy because they are making those supplies available too? Oh, and then add on the fact the local garden center is expected to close and you can see that the whole notion of shared pain just isn’t shared equally by all retailers.

Jeff Sward
BrainTrust

COVID-19 has changed the rules, and the math, of retailing — at least temporarily. It’s outright irresponsible to drive more traffic than social distancing can accommodate. Even on lower traffic patterns, my local grocer (Stop & Shop) has installed one-way routing through the store. Signs posted and arrows on the floor everywhere. Up one aisle and down the next. Minimizes shoppers passing each other in narrow aisles. Smart. And retailers are experiencing costs never anticipated in a normal model. They need every nickel of margin right now to offset the extra protection they are providing the front line, back office and warehouse workers.

Richard Hernandez
BrainTrust

Most retailers are suspending the ads because they know they will not be able to have the supporting products to advertise. Those ad funds are being banked until there is a return to some kind of normal state. Those that are continuing ads are putting out a one-pager with Easter items, produce and seafood items.

Rich Kizer
BrainTrust

It is inevitable that we see fewer TPRs in grocery stores at this time. Here is why I say that. I have spoken to more than 30 major store managers of some of the biggest grocery stores in this area. Their statements to me were almost clear repeats of each other: “Right now, we are literally doing a normal week’s worth of sales every two days. This makes it really hard to do what we normally feature of TPRs. We’re just trying to keep the store merchandised and shelves filled for our customers!”

Neil Saunders
BrainTrust

From our data, promotions in grocers and supermarkets are down sharply over last year. Simple price reductions are the least affected, but mechanisms like multi-buys and promotional displays have been cut back. Comparatively, outside of grocery promotions are up sharply – especially in apparel. However these are mostly online so they don’t irresponsibly drive traffic to stores.

Brian Cluster
BrainTrust

Retailers should be aware of the categories that they are having a hard time keeping in stock and minimize the deep promotions there. However, it is completely appropriate to offer TPR deals to consumers as they are facing some tighter budgets now and in the weeks and months ahead.

Endcaps are more than ways to signal a deal. It can be a way to connect with the customer to solve their problems. For example, if the retailer was planning a spring cleaning display, they should still run that as that is something that many households are still doing right now as they have extra time at home.

Dave Bruno
BrainTrust

While I don’t expect these crisis-driven tactics to have significant long-term impacts on behaviors, right now there are ethical questions surrounding promotional pricing on non-essential items designed to drive store traffic — when store traffic is a health hazard. Even with improved safety and social distancing tactics in place, I just can’t find any way that this makes sense from a public health and safety standpoint.

Bethany Allee
BrainTrust

I want to say that all promotions should be moved to digital format only, but that’s a privileged way to look at the world. Not everyone has access to digital mediums to obtain their food – and this likely intersects with the members of the population who need promotional pricing the most.

In-store promotions should be done before/after store hours to minimize additional exposure for store employees.

Ralph Jacobson
BrainTrust

During crisis times in general, retailers need to be hypersensitive in the messages they are conveying, both intentionally and unintentionally. While it is reasonable for retailers to promote products and services that are in demand and readily available, that must be balanced with ongoing measures to maintain shopper and staff safety, as mentioned in this article. Balance is the key.

Dick Seesel
BrainTrust

Having to limit or suspend TPRs is the least of retailers’ problems right now — especially grocers. They are trying to balance high demand with controlled foot traffic to protect their customers’ and associates health. And they are contending with extraordinarily high operating costs right now — driven by overtime hours, restocking expenses, and a surge in online fulfillment. Grocers operate on slim margins to begin with, and fewer promotions just might help them deal with higher costs of doing business.

Steve Montgomery
BrainTrust

Based on personal observation I have seen a decline in the number of items being promoted not only at the supermarkets but at chain drug stores as well. I’m not sure if this is being done to lower store traffic or because of the lack of promotional support. With non-essential businesses closed and workers out of their jobs many customers are looking to save money and I am sure they appreciate any discounts they can find.

Peter Charness
BrainTrust

Well if there was ever a time for retailers to try to break, or at least reduce, the promo cycle — now is it. Promos are in theory designed to drive traffic and build baskets. They won’t help the former, and help is not really needed for the latter right now. Six months from now — maybe.

Dave Bruno
BrainTrust

Wow, do I hope you are right, Peter — could you imagine a world where we have broken the promo cycle?

Ed Rosenbaum
BrainTrust

This is one of those propositions with no right or wrong answer. Yes, it would be good to continue the sales as it gives a sense of life as it was and will be at some point in the near future. On the other hand, no because we do not want to increase store traffic where people are too close while the virus is still dominating all the world news and attention. I do not want my wife to shop for a bargain at the expense of her health and safety.

Maybe Meijer had the right idea by suspending publication of its weekly ads, on the plus side. On the negative side, it shows a change in normal life that might not be sending a good psychological message.

Ryan Mathews
BrainTrust

On an anecdotal basis I’ve also noticed it here in the metro Detroit area, but it doesn’t seem to be slowing down sales and/or holding. Out-of-stocks in certain categories are the new normal and snack foods tends (oddly to me) to be one of those areas. With demand so high there’s no doubt that some retailers will either raise prices or not feature their normal discounts and, frankly, I don’t blame them. If the whole idea is to keep social distancing in “hot spots” like Detroit, why encourage more shoppers to rush into the stores, especially for discretionary items? And yes, when or if supply chains ever return to “normal” I think you’ll see promotions return again, especially since many more affluent consumers will be “over-stocked” at home.

Doug Garnett
BrainTrust

This is a subtle topic where the answer depends heavily on the situation of the retailer. For example, thinking of the choice from Lowe’s. What’s not reflected here is that lawn and garden season is one of the two key seasons for hardware retail. Unlike grocery, stores like Lowe’s depend heavily on these big seasonal events.

What always has to be traded off is the long term economic health of the retailer (we DO want them to survive this) along with controlling traffic in the store.

That said, I do hope that retailers learn that rules like those noted above are perhaps less important than other issues. As Sergio Zyman observed, stores become “hooked” on TPR because “in the absence of meaning, consumers always fall back on price.” Amid a time of tremendous meaning, TPR should be off the table AND we can hope retailers learn to add meaning when normality returns.

Cathy Hotka
BrainTrust

Grocers are riding a wave of good will right now. They could destroy that good will by profiteering off this crisis.

Ryan Grogman
BrainTrust

Sale pricing to drive store foot traffic is simply irresponsible at this current time. And sale pricing to drive sales in non-essential products will come off as tone-deaf. That leaves the argument that sale pricing will help consumers who are struggling with financial concerns during this crisis and who could benefit from discounts on key items. To me, a smart food retailer would consider using their ad space to run a message indicating that instead of traditional promotional campaigns they will be maintaining current prices on essential items for the foreseeable future. And use that message to reinforce what they are doing to keep more items in stock, promote a safe shopping environment, and communicate steps taken to support their associates.

Joe Skorupa
Guest

Promos are as addictive as heroin for many reasons in retail, so I see a quick return to heavy promotion when the crisis passes. For now, it is not advisable to run in-store promotions — doing so could trigger a consumer backlash.

Joe Skorupa
Guest

Just opened my mail box and see a printed circular with coupons for going to my local Ralph’s. Really?

James Tenser
BrainTrust
Many thanks to you George for the shout-out, but I’m hardly the only observer who has raised this question. (Jon Springer) I have been conversing with several industry experts about this, however, and several of their observations are worth sharing here: Trade promotions still account for the lion’s share of supermarket profits. They are planned on a 12-week lead time, so retailers are not likely to suspend the planning cycle — nor are they turning down manufacturer deals. When the crisis eases, retailers will need to be prepared for a return to something like normal merchandising practices. Retailers are “suppressing” many deals in stores, however. This is especially true in product categories that have experienced wild surges in demand. It makes no sense, for example, to offer toilet paper or canned soup at a stock-up discount right now when shoppers are already pantry-loaded at home. A number of chains have suspended production of their circulars. HEB, HyVee and Sprouts Farmers Markets are noted in the Winsight Grocery Business article. Mollie Stone’s Markets in the Bay… Read more »
Craig Sundstrom
Guest

No (though I haven’t really looked). None. No…why would they?

Lowe’s get an “F” in civics: they’ll have to repeat the class … once school finally reopens.

Kenneth Leung
BrainTrust

Makes sense for grocers to stop advertising promotions. You can still offer discounts in the store if the savings are from suppliers, and customers would appreciate it. No one should go make grocery store trips because of sales. In the case of Lowe’s, that’s a bit different because it is essential (if something is broken that needs repair) but also discretionary (you don’t have to start home improvement projects during a pandemic even if you are sheltered in place). I can see why Lowe’s would offer discounts and promote it to support traffic for those who are still working in construction/repair business.

Chuck Palmer
BrainTrust

I wish I could say Lowe’s doesn’t get to have it both ways, but it seems they will. It’s really disingenuous to go ahead with a promo like this and then hide behind all the measures they’ve taken to “protect” their customers and staff. They are willfully ignoring the seriousness of the threat.

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Braintrust
"This is a time when perspective, empathy, and sense of larger purpose should be your guides."
"Well if there was ever a time for retailers to try to break, or at least reduce, the promo cycle — now is it."
"Retailers should be aware of the categories that they are having a hard time keeping in stock and minimize the deep promotions there."

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