A Retail Event is a retail-specific business activity to increase sales (for example, store opening, sports event, promotion). Potentially affected business processes (procurement, logistics, sales prices, media, arrangement, vendor collaboration, etc.) are associated with a Retail Event.
In today's world, retailers face increasing competition and eroding margins, and customers have become more and more price sensitive and are trained to wait for promotional deals. Many retailers have resorted to spending more money on promotions and have increased the frequency of them. In certain segments, like grocery and drug, there is usually a promotion running every week. Although some retailers pursue an everyday low cost pricing strategy and do not promote very much, some retailers opt for a Hi-Lo pricing strategy and promotions are a key component of their business model.
Well-planned and executed promotions can have a major impact on sales volume in the retail channel. In fact, it is not uncommon to generate many months' worth of sales in a single week's promotion. But there are risks involved with the promotional process. If product demand is higher than expected, consumers can walk away empty-handed, which results in missed sales opportunities and dissatisfied shoppers. Conversely, if retailers overestimate demand, they are left with excess inventory, which means lower overall profitability for these items. So, if a retailer can do this well by using applications that support them, they can create a competitive advantage. One key success factor is strong decision support to guide the user in deciding which products to include in a promotion, which quantities to order, and prices at which to sell the products promoted to achieve an optimal result of the promotion. Promotion optimization tools make use of sophisticated statistical demand and profit modelling to elevate the role of consumer demand in the decision support process. They provide the possibility to simulate the most profitable combinations of products and prices to include in a promotion. These tools also enable "what-if" simulations that take price elastic ties, cross-elastic ties of products, cannibalization, and halo effects into account all within the context of defined constraints and business rules.