Allocation of the household food budget among shopping basket items: How is it influenced by promotions?

Abstract

Retailers have been using promotion as a differentiation strategy that influences consumers’ expenditures and their shopping basket budgetary allocation. This study assessed the effect of retail promotions on total shopping basket expenditure and determined whether promotions provoke a reallocation of the shopping budget. The analysis was performed on a chain of supermarkets in Catalonia, Spain using a consumer scanner data set from Kantar Worldpanel for 2017. The methodological approach had two steps: prediction of the effect of promotion on household expenditures using an expenditure regression model and estimation of the promotion own- and cross-effect using the censored Exact Affine Stone Index. Promotion had a positive own-effect and mostly a negative asymmetric cross-effect, implying a small but significant budget reallocation.