Revenue growth management 2021 – a return to 2019?

Categories that saw high demand and significant supply constraints in 2020, such as toilet paper, baking products, and even household cleaning products, require a pricing strategy adjustment. In the vein of “don’t discount turkeys at Christmas”, high demand categories, particularly those that are highly price elastic, may need to shift to a permanent price strategy – and potentially take price up, or at least promote with shallower discounts – to smooth out the supply chain. Similarly, multibuy promotion mechanics require reconsideration as they drive volume but also erode margins. Single pack promotions may be more appropriate than multipack and case volume buys. This is almost a counterintuitive approach to what has become the promotional norm over many, many years, and in a retail environment where, for example, a 24 or 30-can multi-pack will reduce to almost half its shelf price at peak periods like Christmas and Easter when on promotion, the same or similar to what it was 15-20 years ago, whereas the shelf price has increased more than 25-30 per cent over the same time. Great value for shoppers on promotion, but significantly less so to the manufacturers’ and retailers’ profitability.