When Retail Promotions Hurt More Than They Help

Promotions are supposed to drive trial, increase basket size, and get your brand noticed. And they often do. But there’s a quiet cost to promotions that too many suppliers overlook—especially smaller or growing brands trying to punch above their weight.

Let’s be blunt: Retail promotions can hurt your business if they aren’t strategically designed, tracked, and supported.

Here’s a fictional but very real scenario: A natural granola company runs a BOGO with a major grocery chain. Velocity triples—but the promo wasn't supported by proper inventory planning or retailer compliance tracking. Weeks later, they’re hit with a chargeback for missing display compliance in 137 stores. And then again, with a pricing deduction due to expired promo flags still active at the POS.

All told? They lost over $18,000 on a promo they thought was a win.

What Can Go Wrong:

• Promo cannibalization: You pull volume forward without growing your base.

• Retailer deductions: Compliance issues, expired tags, invalid promos.

• Brand devaluation: You train consumers to wait for discounts.

According to a NielsenIQ study, brands that promote more than 40% of the time see lower average long-term margins than brands that promote less often.

What to Do Instead:

• Be selective. Only run promotions when you have a clear goal: trial, trade-up, awareness.

• Track everything. Know what your discounts are costing you post-deduction.

Don’t train deal-chasers. Aim for promotions that reward loyalty or drive discovery, rather than offering endless discounts.