Price promotions induce consumers to purchase higher-than-usual quantities, resulting in higher stocks that lead to increased consumption. We show for a stylized model with a single shop and a single loyal customer that because of this stockpiling effect, promotions can be profitable even if they do not attract extra customers.
Econometric Institute Research Papers
Erasmus School of Economics

Teunter, L.H, & Teunter, R.H. (2004). Profitability of price promotions if stockpilling increases consumption (No. EI 2004-10). Econometric Institute Research Papers. Retrieved from