Changes to consumer shoppingpatterns spurred by the COVID-19 pandemic should prompt grocerystore owners to rethink their approach to using promotions to lureand retain customers, according to a new report from managementconsulting firm Bain & Company.

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The report, authored by Bain& Co. Chicago partners Stephen Mewborn and Stephen Caine,Atlanta partner Sandeep Heda and London-based Expert Vice PresidentSumner Makin, claims that grocers have traditionally had only alimited understanding of which promotions drive the highest returnon investment and which break-even or lead to losses. The reportsays that grocers should take advantage of the"once-in-a-generation opportunity" presented by the pandemic toeliminate poorly performing promotions and focus on items thatconsumers really care about.

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The report points out thatgrocers experienced a temporary increase in demand as consumersloaded their pantries as restaurants closed in the face of forcedshutdowns prompted by the pandemic. In the time since, customershave tended to consolidate fewer shopping trips into fewer storesto limit their proximity to other people. The change in consumerhabits has led to an influx of new customers for some grocers atthe same time stores have faced worker shortages due to sicknessand employee childcare issues. The increases in store traffic andlabor costs have combined to make the set up of traditionalin-store space to feature certain items and end-of-aisleshort-term promotions less efficient.

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"While grocers dialed backpromotions during the pandemic, primarily because of acuteoperational challenges during the height of the initial demandsurge, that is a temporary lull and value-conscious customers willbe eager to see promotions return," the report's authors write."This is the time for bold steps, not incremental tweaks to what astore did last year."

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The report calls on grocers touse their most recent consumer response data and machine learningtechnology to run tests on price elasticities and promotions "thenset price points, test, learn and repeat before a scalerollout."

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Ross Todd

Ross Todd is the Editor/columnist for the Am Law Litigation Daily. He writes about litigation of all sorts. Previously, Ross was the Bureau Chief of The Recorder, ALM's California affiliate. Contact Ross at [email protected]. On Twitter: @Ross_Todd.