Even prior to the highly fluctuating demand driven by recent business disruptions, competitive pressures and the inability to efficiently manage inventory have driven retailers to increase focus on promotional forecasting and management. Further complicating matters include an over-stored industry, easier access to competitive pricing and promotional information, and the rapid consumer demand for omnichannel capabilities across the retail industry.

The combination of promotions engendered by merchandising and the multiple layers of digital and customer-direct offers has muddied the water further. Merchants carefully plan their promotions during the pre-season, purchase inventory to support those events, and work with their marketing counterparts to prepare the appropriate communication vehicles. At the same time, the e-commerce team, operating on a shorter lead-time, may be reacting to business performance by adding and changing offers on a daily, even hourly basis. On top of this, the customer relationship management (CRM) team develops e-mail and social media offers to drive traffic to the store and the site. The net result of these interacting promotions is that retailers are in danger of losing control of their pricing and their margins, not to mention confusing and frustrating their target consumers.

Unfortunately, many retailers are seeing their financial performance suffer as a result of the competitive promotional melee. One of the reasons for the degradation in the effectiveness of individual promotions and the resulting margins is the lack of ability to predict the outcome of these stacks of promotions.