Changes to consumer shopping patterns spurred by the COVID-19 pandemic should prompt grocery store owners to rethink their approach to using promotions to lure and retain customers, according to a new report from management consulting firm Bain & Company.

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

The report points out that grocers experienced a temporary increase in demand as consumers loaded their pantries as restaurants closed in the face of forced shutdowns prompted by the pandemic. In the time since, customers have tended to consolidate fewer shopping trips into fewer stores to limit their proximity to other people. The change in consumer habits has led to an influx of new customers for some grocers at the same time stores have faced worker shortages due to sickness and employee childcare issues. The increases in store traffic and labor costs have combined to make the set up of traditional in-store space to feature certain items and end-of-aisle short-term promotions less efficient.

"While grocers dialed back promotions during the pandemic, primarily because of acute operational challenges during the height of the initial demand surge, that is a temporary lull and value-conscious customers will be eager to see promotions return," the report's authors write. "This is the time for bold steps, not incremental tweaks to what a store did last year."

The report calls on grocers to use their most recent consumer response data and machine learning technology to run tests on price elasticities and promotions "then set price points, test, learn and repeat before a scale rollout."

Instant Insights /

Pandemic Gives Grocers Opportunity to Rethink Price Points

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