How do retailers compete on price promotions? Evidence from a temporary promotion ban in Belgium
(2022) , 11 pages
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- Abstract
- In March 2020, the Belgian government imposed a two-week promotion ban to contain panic buying at the beginning of the Covid-19 Pandemic. Using a unique daily dataset tracking list prices and promotions in different retail chains at the store level, we investigate how retailers set price promotions once the ban was lifted. We find that both frequency and size of promotions reverted to the pre-ban but only several months after the ban was lifted. This effect presents large heterogeneity across retailers: one chain acted as a promotion leader, reintroducing promotions quicker than others. Another large chain acted as a promotion follower, reintroducing promotions more gradually but eventually setting more frequent and larger price promotions than in the pre-ban period. Overall, the promotion ban was a major factor driving up sale prices in Belgian stores.
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Citations
Hindriks, J., Madio, L., & Serse, V. (2022). How do retailers compete on price promotions? Evidence from a temporary promotion ban in Belgium (LIDAM Discussion Paper CORE 2022/05). https://hdl.handle.net/2078.5/273277