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Promotion Cannibalization: When Discounts Shift Rather Than Grow Sales
Promotions are designed to drive sales, attract customers, and encourage additional purchases. But an increase in promotional sales does not always mean the retailer has generated new demand. Sometimes, customers simply change what, where, or when they buy because of the promotion. A customer who would have purchased a full-price product may switch to a discounted alternative. Similarly, a promotion on one category may shift spending away from another category, or customers may bring forward purchases they would have made later. For example, a retailer may offer a 30% discount on a premium shirt. Sales of that shirt increase significantly, [...]
