Price reposition and promotion rationalisation - Bensons for Beds
The Situation
CEO wanted to understand promotional spend and ROI…..
Promotions are a huge part of sales participation in the bed & mattress marketplace – they provide something to shout to customers about and give a timed call to action. However, its very difficult to determine which promotions add value or drive a return on investment.
For example; do they drive conversion, incremental sales or are some a waste of effort or a distraction?
This was the customers dilemma….
The Task
- Identify price and promotional opportunities to optimise revenue, margin and ATV performance in FY22
- Identify key price and promotional changes and improvements to enable 3yr plan growth expectations
- Develop, agree and implement the ways of working that support the right weekly & monthly review of price and promotion performance:
- Reporting and KPI’s
- Governance
- Roles & responsibilities
The Action / Approach
The first action was to fully understand and illustrate the scale of the promotions across the business; by promotional mechanic, category and SKU.
We ran various analysis techniques including regression based models to understand the impact on sales of each of the variables.
We also analysed the base and promo prices vs. key competitors to understand how these compare and identify the challenges and opportunities.
The Result
It was discovered there were ca. 9,000 – 10,000 SKUs on promotion at any given time
However 55% of this promotional activity drove less than 5% of promotional sales
The promotional plan was reduced by ca. 40%, reducing additional resource and marketing costs and enabling better clarity for store colleagues and customers alike
Price index analysis also identified some clear targets and repositioning opportunities that would drive £1.4m in annual profit
A clear price and promo framework was built and documented enabling ongoing governance and course correction at board level
9% LFL reported sales have since been reported (this project would have helped contribute)
