Supermarket Promotions At Lowest Level For Over Seven Years

The proportion of consumer spend at UK supermarkets that goes on items on promotion has hit its lowest level in over seven years, according to the latest data from Nielsen.

In the four weeks ending 23 April 2016, 29% of spend at UK supermarkets went on products with temporary price cuts or multi-buy offers, the lowest level since February 2009 (also 29%).

Mike Watkins, Nielsen’s UK head of retailer and business insight, explained: “Over the last two years, around 34% of a typical supermarket shopping bill went on promotional items. However, to help combat the rise of the discounters, supermarkets are now turning temporary price reductions into permanent cuts. Consequently, there’s now less promotional activity as many prices are cheaper all-year round.”

Nielsen’s data showed that Aldi and Lid’s share of the grocery market reached 11.5% in the twelve weeks ending 23 April 2016, compared to 10.1% a year ago – a relative rise of 13.9%. Nearly half of all households now shop at a discounter every month – up from 40% two years ago.

All four of the major supermarkets saw a decline in sales. Aside from the discounters, only Marks & Spencer (3.1%), Waitrose (2.7%) and The Co-Operative (1.6%) saw higher sales than a year ago, and a rise in market share.

“Only M&S, Waitrose and the Co-op seem able to fight off the rise of the discounters and attract more shoppers, which is set to become even harder in the second half of 2016 as both Aldi and Lidl open more stores,” said Watkins. “The Co-operative Group, for example, has opened more convenience stores to capture a greater share of ‘little and often’ shopping trips, typically no more than 10 items.”

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Due to Easter falling earlier this year and not in the latest four-week figures, sales value was down 5.1% and volume down 3.6% versus the same period a year ago – which did include Easter.

Watkins commented: “Looking across the last eight weeks, to negate the Easter impact, value growths were still down 1.3% and volume down 1.1%. Prices are lower than a year ago and there’s been little sales momentum at the supermarkets since Easter, not helped by the cool weather. Some sunshine over the next few weeks could be the kick-start for sales growth the industry needs.”

NAM Implications:
  • The question for NAMs has to be when – and if – savvy consumers will ever allow a return to multi-buy promotions now that they have experienced everyday low prices
  • Time for suppliers to look inward for genuine competitive-edge vs. available alternatives
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