Promotions plunge taking 18% from shoppers pockets
Shoppers face missing out on almost £4bn of promotional savings during 2017, with the number of offers in significant decline as supermarkets and brands come under numerous pressures, including the need for pricing transparency and the discounters’ growing market share.
The average number of fmcg lines on promotion in the mults, Iceland and the Co-op fell year on year by 13% from February to May, resulting in an 18% reduction in consumer savings compared with the same period in 2016. Brits would benefit from £3.7bn less in savings were the trend to continue for the rest of 2017 [IRI Price and Promotion Study 2017].
This year’s decline is the latest in a longer downward slide. There has been a 25% reduction in the number of items on offer across 300 categories since November 2012, when the Office of Fair Trading (now the Competition & Markets Authority) released its guidelines on promotions. “The rules had put retailers and suppliers under pressure to change the way they offer savings and to be more transparent,” said Tim Eales, director of strategic insight for IRI.
“We’ve also seen market share gains from discounters with their simplified approach to pricing, along with changing shopper habits and, more recently, increased cost pressures such as the impact of sterling devaluation on manufacturer and retailer margins,” he added.
Britain’s biggest supermarkets appear to be switching back to multibuys, though, despite promising to make pricing simpler for shoppers, reported by Assosia.
Across the UK’s major mults, x for y deals accounted for 24.7% of total featured space promotions last month, up 5.5 percentage points from the same four-week period in 2016. Bogofs were also up slightly, though they still only accounted for 1.6% of total deals.
At the same time, save deals were down by 10 percentage points year on year, accounting for 60.2% of deals, compared with 70.6% of deals at this time last year. As a result, multibuys accounted for 26% of promotions, up from 20% last year.
“Going against the usual trend, all retailers reduced save deals and increased multibuys compared to this time last year. Waitrose made the biggest change, increasing multibuys by 18.8 percentage points year on year to account for 43.2% of its total featured space promotions,” says Assosia director Kay Staniland. Part of the push back towards x for y offers might be “savings related”, Staniland adds, with save offers giving an average saving of 29.7% last month, while multibuys offered only 24.1% savings on average.
Average savings were down year on year across most of the major mults with the exception of Tesco and Sainsbury’s.
Sainsbury’s has reduced the number of total featured space promotions in stores – by 12.5% month on month and 24.7% year on year – but average savings were up 1.5% on last year. This was despite the supermarket ramping up its use of both the x for y and bogof mechanics.
Tesco has increased the number of deals in stores by 2.2% and average savings by 1.2%, both year on year. Multibuys accounted for 25.4% of its deals, compared with 19.7% last year.
“With an average % saving of 34%, Co-op (despite having the least promotional activity) appears to offers the best deals,” adds Staniland.