Any post-crisis (or even mid-crisis) is the best time for new opportunities, offering a clean slate for growth and rebirth. For years, promotional ineptitude has been well documented – with Nielsen publishing that 2/3 of promotions fail. Confirmed by study after study that would show anywhere between 80-90% of them don’t unleash additional revenue or margin. Even with that knowledge, the allure of trade dollars, and the risk of dramatic change, compelled most to stay the course and continue to invest in bad promotions. That’s now changed.
Not an Ideal Predicament
Depleted revenue, compressed margins, a shortage of labor, plus an infrastructure not designed for an online volume consisting of 40-60% of total sales. Not ideal for fashion retailers. And beyond that, retailers experience up to 8 percentage points of margin loss on a digital order.1
In years to come, the extreme product shortages of the pandemic may seem like just another blip in the history of marketplace behavior, but they leave behind a permanent realization that the possibility of near-term events that can rapidly cause consumer demand to explode or supply to be interrupted is very real. Furthermore, these events seem to be happening more than ever before, and they can also defy market logic. Case in point – the recent unbowed demand for lumber despite prices that are more than four times the norm.