Promotional spend at the multiples dips to 11-year low following efforts to stop exodus to the discounters

Jo Gilbert

Birmingham wine festival organisers hope to change people's perceptions of wine in the West Midlands, where 41% said they would not spend more than £5 on a bottle of wine in a recent Harpers survey.

The latest retail data from Nielsen shows that the multiples are now truly marching to the beat of the discounters’ drum following concerted efforts over the past year to replace a reliance on multi-buys with a focus on simpler price cuts.

In an effort to be more competitive on prices and make things more straightforward for shoppers, supermarkets have dialed down their recent promotional offerings, including across beers, wines and spirits.

As a result, the proportion of spend going on items on promotion hit its lowest level in 11 years. 

In the four weeks ending March 25, just over a quarter (26%) of spend at UK supermarkets went on products with temporary price cuts or multi-buy offers, the lowest level since 2006 (also 26%).

The reduction in promotional spend is happening across all categories, but is much faster in supermarket’s own or private label spend (just 18% of sales in the last year went on promotional spend) than sales of branded goods (41%).

“The level of promotional spend has gone back to levels not seen since before the 2008/09 economic crisis,” Mike Watkins, Nielsen’s UK head of retailer and business insight observed.

“The last few years have seen about a third of the typical supermarket shopping bill going on promotional items. However, to be more price competitive, supermarkets have turned temporary price reductions into permanent cuts, so there’s less promotional activity as many prices are cheaper all-year round.”

In the past year, there has also been pressure from regulators on the supermarkets to clean up their promotional act, with Asda coming under fire for misleading in-store deals.

While making more sense financially, simpler price cuts also make it easier for consumers to manage basket spend – a motivational factor when choosing where to shop in these tough economic times.

Going forward, the supermarkets’ receptiveness to the trend for convenience shopping will also have an impact on how they are able to exploit shopping habits.

“Looking ahead, supermarket growth will come from exploiting the ’little and often’ shopping trend, product innovation including private label and food to go, as well as maximising sales during seasonal events such as Easter,” Watkins added.

“Supermarkets are well placed to fulfil these mission-based shopping trips and increase total store spend through different and larger store formats which highlight the breadth of range not available at a discounter. This is particularly important with many retailers reviewing business models in light of the shift to omni-channel retailing.”

 

 

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