When a promoted product runs out of stock, someone makes a substitution decision.
A picker grabs a different SKU. A customer accepts an alternative. The promotion continues.
But the commercial logic breaks. The substitute might not be promotional. It might carry a different margin. The supplier might still pay funding for a sale that never happened on the original SKU.
Nobody tracks this. Nobody reports it. And it happens at scale.
4-6% of online grocery orders involve substitutions
(Woolworths FY23 Annual Report) https://www.woolworthsgroup.com.au/content/dam/wwg/investors/reports/2023/wowfy23annualreport.pdf
E-commerce now represents 10.4% of Coles supermarket sales (Coles FY23 Results) https://www.colesgroup.com.au/investors/?page=annual-reports
Out-of-stock rates in Australian grocery sit at 5-8% under normal conditions (Australian Retailers Association) https://www.retail.org.au/
Those are baseline numbers. During promotions, the pressure intensifies. More demand. Tighter inventory. Higher out-of-stocks. More substitutions.
But there's no public data showing substitution rates specifically during promotional periods. Retailers don't disclose it.
A supplier and retailer agree on promotional terms. SKU A at price X with funding rate Y. The contract is SKU-specific.
When SKU A runs out and SKU B gets substituted:
Nobody knows. The transaction happens. Settlement occurs weeks later in bulk. The details get lost in aggregated reports.
1,247 complaints about promotional pricing failures reached the ACCC in 2022-23 (ACCC Annual Report 2022-23) https://www.accc.gov.au/about-us/publications/annual-reports
These include "promotional pricing not applied," "advertised specials unavailable," and "charged full price despite promotion."
Substitution sits inside these categories but isn't tracked separately. The system categorizes it as a general pricing complaint, not a structural promotional failure.
Promotional performance reports show volume sold. They don't show:
Category managers optimize for promotional uplift. But some of that uplift is substitution masking forecast errors and stock-outs.
GS1 Australia sets the data standards for Australian retail. Their EDI transaction sets don't include codes for promotional substitution events. https://www.gs1au.org/
AGSVA runs the audit framework for grocery suppliers and retailers. Their standards don't require substitution reporting linked to promotions. https://www.agsva.com.au/
Woolworths discloses overall substitution rates (4-6%). They don't disclose:
This is a choice. The transaction data exists. The reporting doesn't.
The ACCC Food & Grocery Code Review received consistent feedback from suppliers: "lack of transparency in promotional settlement" and "limited access to granular sales data." https://www.accc.gov.au/by-industry/grocery-food-and-retail/food-and-grocery-code-of-conduct/food-and-grocery-code-review
Post-campaign settlement happens in bulk. Aggregated volume. Aggregated funding deductions. No line-item visibility into what was substituted.
Suppliers can't verify. Retailers control the data. Disputes get resolved via negotiation, not evidence.
Substitution during promotions isn't rare. It's structural.
It happens thousands of times per day across Australian grocery. And it rewrites the commercial outcome of every promotion it touches.
The promoted SKU doesn't get sold. A different SKU does. The customer might not get promotional value. The supplier might pay funding for a sale that didn't happen. The margin might shift.
And none of it gets reported in a way that connects substitution events to promotional outcomes.
The infrastructure to track it doesn't exist. The standards don't require it. The incentives don't reward it.
So promotional performance gets measured by what the system says happened. Not what actually happened.