The impact of sales promotions on store performance: a structural vector autoregressive approach

The present paper analyses the impact of sales promotions on store performance, in the short and long term, from the retailer's point of view. Relationships among promoted and regular sales in the hypermarkets of a large-scale retail chain of national importance, are investigated by means of a structural vector autoregressive model (SVAR). Statistically significant effects of sales promotions in the heavy household section on store sales are found in the short-run; these promotions produce additional sales and thus act as an attractive factor. Promotions in textile category, on the contrary, produce an immediate negative effect on net sales. In the long run, negative statistically significant effects on regular sales are detected when promotions are repeatedly implemented within perishables category.