Promotions Are Key as Choices Grow

With consumers facing time constraints, budget constraints and more shopping choices than ever before, promotions are the key to winning the convenience wars.

"Effective promotion is our only way to connect with our customer to drive home the value message," said Leroy Kelsey, director of industry analytics at NACS, the Association for Convenience & Fuel Retailing.

Leading the panel, "Buy Me! A Promotional Analysis," at the 2013 NACS Show, Kelsey explained that NACS research found one third of consumers said they are aware of store promotions. Of that, one third said awareness translated into engagement -- or 11 out of 100 customers.

"There is a huge opportunity [for convenience stores]. We are already getting traction, but how do we bring it further?" he posed, adding that it is not enough to know customers' awareness and engagement levels; you must also know what touchpoints are reaching them.

MAPCO Express takes a three-step approach to its promotions: identify the hurdles and trends; define the purpose of the promotion; and measure, measure, measure, according to Ana de la Torre, category manager at the Brentwood, Tenn.-based convenience retailer.

While running a promo is the first step, she explained that c-store operators need to conduct some follow-up to determine the effectiveness of the promotion. For example, retailers should look at the overall category sales lift -- not just on the promoted item -- to spot any cannibalization.

In addition, it is important to examine the halo effect: Did the promotion influence customers to purchase items?" de la Torre said. When measuring the effectiveness, retailers should look at sales data from four to six weeks before the promotion, sales during the promotion, and sales four to six weeks after the promotion.

Dave Daniel, vice president at GetGo/GSX Operations at Giant Eagle Inc., said analyzing promotions is critical for retailers who operate with limited resources and want to make sure they are on the right track. However, it is also key to look at qualitative and quantitative data.

"Quantitative analysis only gives you part of the picture," he added.

There are several questions to keep in mind:

• Did the promotion reach its stated objective?
   
• Was it cost effective?
   
• What impact did the promotion have on sales and the bottom line?
   
• Should the promotion be repeated, modified or scrapped?

"Inevitably, you need more than just the numbers to analyze your promotion," Daniel said.