Promotions Gone Wrong: When Retail Discounts Hurt More Than They Help

Promotions feel like a win-win. Shoppers get a deal, sales lift, and the retailer’s happy. But not every promo helps. Some destroy margin without driving lasting volume.

Here’s the trap: trade spend is one of your biggest costs, often 20%+ of gross sales. Yet many promotions are planned on gut feel, not hard data. This leads to “race-to-the-bottom” discounts, where sales spike briefly but then fall back once the price returns to normal.

A fictional example: A granola brand spent $50K on BOGO offers at a regional chain. Units moved, but post-promo sales stayed flat. Worse, they trained shoppers to wait for discounts.

Net result? Lower margins, no category growth.

The better approach is to measure ROI like you would any investment. Did the promo expand trial? Did it grow basket size? Did it attract new shoppers or just subsidize existing ones?

Promotions should build momentum, not buy short-term velocity. Done wrong, they’re not a marketing cost—they’re a margin leak.

Ready to make your retail promotions actually pay off? Woodridge can help you turn trade spend into real growth, not wasted dollars.