The latest industry data reveals that supermarket one-off promotions have sunk to an 11-year low. The Nielson report shows that in the 4 weeks ending 25 March 2017, 26% of UK supermarket spend was on items with temporary price cuts or multi-buy offers, matching a rate last measured in 2006
Promotions on goods have typically made up a third of a shopper’s grocery basket over recent years, but the rise of discounters, such as Aldi and Lidl, has forced the large supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – to offer less promotions, opting instead for permanent price cuts in the big battle for market share.
Nielsen’s UK head of retailer and business insight Mike Watkins said: “The level of promotional spend has gone back to levels not seen since before the 2008/09 economic crisis. 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.”
However, as covered in last week’s blog, tactics such as price cuts risk being nothing more than a quick fix. Unless they are part of a long term growth strategy, they can damage a brand’s reputation and cheapen the identity as a whole, increasing consumer expectation for rock bottom prices. Watkins said “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,” concludes Watkins. “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.”
Supermarkets need to employ promotional tactics such to secure loyalty – not a one off spend. This type of activity can include coupons enabling consumers to see the product at full price and then feel rewarded by the brand for purchasing their product. However, retailers also need to recognise the importance of enabling coupons in the omni-channel environment. Valassis’ research shows there is a real appetite among shoppers for digital coupons – one-third of shoppers prefer digital coupons over paper coupons. Mobile coupons can also be a cost saver versus their paper equivalents for retailers in some respects – less hassle to handle; cheaper to process; and potentially more secure – the risk of misredemption is reduced as it is more difficult to copy or use the coupon more than once. They also provide more scope for creative, personalised offers.