Impact of retailer's promotional activities on customer traffic

The usual theoretical assumption that the retailer's promotional activities serve the purpose of attracting customers into stores lacks empirical verification. The relationship between promotional activity and customer count is examined empirically in just a few studies, and no significantly positive association is found. This dissertation is a comprehensive empirical study of a unique time series cross section dataset, which contains scanner data representing 28 product categories in a large supermarket chain over two and a half year long period. The main result of this dissertation is that retailer's promotional activities are positively related to customer count. Two constructed measures of the promotional activity have a positive significant effect on store traffic that is comparable with the customer count effect of an average holiday. Some 55 percent of the positive long-run promotional activity effect is felt immediately, and the remaining 45 percent is spread over a five week long period. The promotions have prolonged effects that last until the next promotional peak -???????? the next holiday. It is also found that promotional discounts have positive and significant effect on store profit.