UK supermarkets see spending on promotional items plummet to pre-2008 crisis low

The spending slump has hit all items, but is most acute on stores’ own labels

Miles Dilworth
Monday 03 April 2017 16:40
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Spending on promotional items in UK supermarkets has plummeted to its lowest level since before the 2008 financial crash, new figures show.

In the four weeks ending 25 March, just over a quarter, or 26 per cent, of consumer spending at UK supermarkets went on products with temporary price cuts or multi-buy offers, the lowest since 2006, when it was also 26 per cent, according to Nielsen retail data released on Tuesday.

The spending slump has hit all items, but is most acute on stores’ own labels, where just 18 per cent of sales over the past year went on promotional items compared to 41 per cent among branded goods.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said the downturn could be explained by supermarkets adopting new sales strategies in order to remain competitive.

“The level of promotional spend has gone back to levels not seen since before the 2008/09 economic crisis,” he said.

“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.

“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," he added.

Overall, year-on-year takings at supermarkets during the four weeks ending 25 March fell by 2.6 per cent as the timing of Easter this year negatively affects comparative sales.

In terms of individual supermarkets outside the discounters, Iceland was the best performer over the last 12 weeks in terms of year-on-year sales, up 5.2 per cent, followed by Marks & Spencer, up 2.6 per cent, and the Co-operative, up 1.2 per cent.

“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,” said Mr Watkins.

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