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Supermarket promotions hit 11-year low

News, 05 April 2017
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LONDON: Supermarket promotions in the UK have fallen to their lowest level in 11 years as grocery retailers shifted temporary price reductions into permanent cuts among other tactics, a new report has revealed.

According to research firm Nielsen, which based its findings on a panel of 15,000 UK households covering the four weeks to March 25, just 26% of UK supermarket consumer spend was committed to temporary discounts or multi-buy offers.

The supermarket sector last saw such a low level of promotional spend in 2006 and the recent trend particularly affected own-brand or private label spend.

Over the past year, Nielsen found that just 18% of supermarket private label sales went on promotional sales, compared to 41% of branded goods.

Mike Watkins, Head of Retailer and Business insight at Nielsen, explained that supermarkets have had to become more price competitive, so have turned temporary price reductions into permanent cuts.

Although he did not mention Brexit, the UK's decision to leave the European Union has seen the value of Sterling fall and this in turn has increased price pressures on supermarkets, especially for imported goods.

"There's also been a shift away from multi-buy to simpler price cuts, which is in tune with shopper needs to make it easier to manage their basket spend," Watkins added.

Nielsen also reported that overall year-on-year supermarket sales fell 2.6% over the four-week period to March 25, with this year's late Easter in April taking its toll.

Looking at the sales performance of individual supermarkets, apart from the discounters, Nielsen said Iceland was the best year-on-year over the past 12 weeks.

The freezer-dominated chain saw sales growth of 5.2%, followed by Marks & Spencer (up 2.8%) and the Co-operative (up 1.2%). Meanwhile, Morrisons was the only one of the "Big Four" to record a year-on-year rise in sales (+0.6%).

Looking ahead at the prospects for UK supermarkets, Watkins said: "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."

He added: "Supermarkets are well placed to fulfil these mission-based shopping trips and increase total store spend through different and larger store formats."

Data sourced from Nielsen; additional content by WARC staff

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