Do Supermarket Promotions Actually Work?
A Breakdown of ROI by Channel
Let’s break it down — from price mechanics to promotional planning, and how brands can make smarter decisions.
Supermarket promotions are a cornerstone of FMCG marketing in New Zealand. From front-of-store displays to price discounts and catalogue features, brands spend significant budget every year trying to influence shopper behaviour at the shelf. But how effective are these investments? And which promotional channels actually deliver ROI?
Why Brands Invest in Supermarket Promotions
Retail promotions serve two primary purposes – but not all promotions are created equal. Without a clear understanding of cost vs. return, brands risk eroding margin without achieving meaningful growth.
To drive short-term sales uplift, often through discounting or increased visibility
To build longer-term brand equity and shopper awareness
The Promotional Landscape:
Key Channels in NZ
Here’s a breakdown of the most common supermarket promotional tools in the New Zealand market:
| Channel | Example | Typical Cost | Reach | ROI Potential |
| Price Promotions | “Was $5.99, now $3.99” | High (margin erosion) | High | ✅ High if supported by visibility |
| Catalogue Features | Foodstuffs Mailer, Countdown Digital | Medium | High | ✅ Solid ROI if timed well |
| Off-Location Displays | Dump bins, end caps, shippers | Medium–High | Medium | ✅ Strong short-term lift |
| Sampling/Demos | In-store tastings | High (staff + product) | Low–Medium | ⚠️ Mixed — more brand than volume |
| Flybuys / Clubcard Offers | Loyalty-triggered discounts | Medium | High (loyalty members) | ✅ Data-driven + measurable |
| Gondola Ends / Eye-Level Facings | High-traffic shelf placement | Premium slotting | High | ✅ ROI improves with volume brands |
| Digital Screens & Retail Media | Countdown Ads, Pak’nSave TV | Variable | Low–Medium | ⚠️ ROI depends on creative + CTA |
How to Measure ROI Across Promotional Channels
To understand ROI, brands should measure:
Baseline vs. Promo Sales
What’s the uplift during promotion vs. usual sales?
Incremental Volume
How much volume was truly added — not just pulled forward?
Cost of Promotion
Discount margin loss + fees (e.g., Foodstuffs mailer charges)
Post-Promo Dip
Did sales return to baseline, or drop below?
A Simple ROI Formula:
ROI = (Incremental Gross Profit – Cost of Promotion) / Cost of Promotion
This formula helps calculate whether your promotion was worth it — not just in sales, but in actual return.
Channel by Channel: ROI Insights
Price Promotions (High ROI with Risks)
Price discounts often deliver high volume uplifts — but they come at a cost. A -30% promotion can cannibalise profit if not backed by trade spend support or scale.
💡 Tip: Bundle price with visibility — e.g., catalogue + display + shelf-talker — for stronger ROI.
Catalogue Features
(Solid Performer)
Mailers and digital catalogues are still widely shopped by price-conscious Kiwis. They’re especially valuable during seasonal events and launch windows.
💡 Tip: Push for front-page or early placement. Pair with a strong hero visual and call to action.
Off-Location Displays (Impactful if Executed Well)
End caps and freestanding units catch shopper attention and drive impulse. But execution matters — an empty shipper = wasted budget.
💡 Tip: Monitor store compliance and time your displays with catalogue dates.
Sampling & Demos (Brand-Building, Not Always Sales-Driving)
In-store demos offer high engagement, but ROI in pure volume terms is mixed. Best used for NPD launches or high-consideration categories.
💡 Tip: Use QR codes or promo offers to track conversion and build a remarketing list.
Loyalty Offers (Smart, Data-Led ROI)
Clubcard and Flybuys promotions can be tightly targeted to high-value shoppers. They allow for controlled testing, segmentation, and attribution.
💡 Tip: Use personalised targeting to offer deeper discounts to lapsed or light buyers.
Retail Media & Digital Screens (Emerging)
Retail media (e.g., Countdown Ads) is growing, but ROI depends heavily on the creative, targeting, and call-to-action. Many NZ brands are still experimenting.
💡 Tip: Use digital to amplify existing campaigns — not as a standalone.
Why Some Promotions Fail
Even with strong mechanics, promotions can flop if:
- Stock is unavailable or misplaced in-store
- Staff don’t build the displays
- Messaging is unclear or off-brand
- The timing misses seasonal or competitive windows
- There’s no follow-up to convert one-time buyers
Smart Promotional Planning: ROI-Driven Strategy
To build a smarter promotion plan:
- Align with key shopper occasions (e.g., school holidays, winter wellness)
- Negotiate with retail buyers for bundled value (e.g., catalogue + display)
- Review retailer commercial models — e.g., Foodstuffs’ new Promo Charges
- Track your Rate of Sale (ROS) per store per week before and after
- Invest in post-promo analysis — then improve and repeat
So… Do Supermarket Promotions Work?
Yes — when they’re part of a strategic plan, not just reactive discounting. The most successful FMCG brands in New Zealand treat promotional spend like any other investment: with planning, data, and clear objectives.
Use each channel for what it does best. Catalogue for awareness. Price for volume. Displays for disruption. Loyalty for precision. And always measure what matters.
Want Help with Retail Promotions?
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