When consumers tighten their purse strings, they will sniff out a bargain and calculate the value in every purchase they make. No surprise, then, that promotions are now capturing the attention of shoppers like never before.
Research by food and grocery expert IGD reveals that more than a quarter (27%) of shoppers in Europe have made changes to their food and grocery shopping due to the recession. Joanne Denney-Finch, chief executive of IGD, says: "Shoppers are shopping around more, wasting less, seeking out promotions, planning meals and taking their time to find deals."
Shopper research company HIM's Recession Study, which polled a nationally representative online sample of 1,017 UK adults, backs up IGD's findings. It found that 56% of shoppers are shopping around for the best price or promotion on food, 57% check food and drink prices before buying, and 44% are collecting money-saving vouchers and tokens.
While promotions have always been a vital ingredient in a successful convenience store, the 'buy one get one free' and 'when it's gone, it's gone' deals are being firmly pushed to one side as the £1 offer stakes its claim as the king of promotions. As HIM chief executive Mike Greene says, shoppers want what they need for less rather than buying more than they need.
"Retailers have seen promotion penetrations increase year on year and I believe it is due to a combination of increased value demand and the fact that retailers have been more focused on money-off and value rather than multi-buy," he says.
The £1 mechanic resonates with shoppers because it's easier to add up and people often have a pound in their purse, adds Greene. "C-store shoppers have limited time in-store. Pound promotions are easy and quick to understand, and can be purchased with pocket change."
Retailer Poundland has been at the forefront of the £1 offer since it opened its first store in 1990. But if its latest financial results are anything to go by, it has shifted up a gear in the current economic climate. Operating profits were up 47% to £11.8m in the year ending March 2009, and like-for-like sales were up 2.1%. The retailer now runs 217 stores, with 250 expected to be in operation by the end of the year.
Poundland chief executive Jim McCarthy says: "The economic climate is forcing people of all demographic groups to think about how carefully they spend their money. That and the perceived value of a single price point is a compelling combination."
The retailer sells products across 16 categories and is rolling out the sale of two-litre milk bottles and a range of 10 sandwiches. The retailer has developed exclusive packs in partnership with suppliers to offer shoppers difficult-to-beat value. For example, a 1.5kg pack of sugar has a price-per-kilo value of 67p, compared with about 93p in most food stores, according to McCarthy.
Symbol groups and wholesalers have been helping convenience retailers compete with this level of value with £1 initiatives of their own. Spar wholesaler Blakemore, for example, has developed the Pounds Down concept with household products and toiletries, and according to Julie Sharpe, manager of Tates Spar in Sleaford, Lincolnshire, it's going down a storm.
"These pound stands have really boosted our promos," she says. "The deodorants and household products are on a pound stand next to the fruit and veg. People see the pound sign and they immediately think they're getting a bargain."
Musgrave has been ramping up sales of fresh produce by up to six-fold in Budgens stores, and is rolling out the £1 promotional offers to Londis retailers, too. Sales of grapes and potatoes increased by 300% and mushroom sales rose by a whopping 600% in Budgens stores.
The £1 deals are supported with a pos package that includes banners, wobblers, hanging arrows and posters. At least five fresh produce items will be available every three-weekly promotional period for £1, and the offer is flagged up on consumer leaflets.
Kevin Whalley, who runs the Budgens stores in Chalfont St Peter, Bedfont and Langley, says: "This is a fantastic tool to drive sales and volume and at the same time give customers just what they're looking for. It gives the perception of great value and we've seen huge uplifts in sales as a result."
Distributor DCS has developed the Poundzone initiative, giving convenience retailers the chance to source household and toiletry products to sell for a pound through a number of wholesalers including Hyperama, Parfetts, Palmer & Harvey and Blakemore. The products include big brands as well as DCS's own label Enliven. Some of the best discounts have included Palmolive Handwash Hygiene Plus 300ml, which usually retails at £1.72, and Comfort Vaporesse one litre, whose normal rrp is £1.69.
Sales of Enliven, which includes liquid handwash, shampoo, conditioner, styling products, shower gel, hand sanitiser, and a range of men's grooming products, have grown by 63% in the first six months of 2009, and stores who take on the Poundzone concept are "enjoying good incremental growth", says David Hughes, category manager at DCS.
"It's the perception of value," he says. "Let's face it, you can't buy much for £1 anymore not even a coffee so when customers are increasingly shopping in high street stores where every product is on sale for £1, they are attracted to the same initiatives in a c-store."
One independent retailer which has been flagging the £1 price level for almost as long as Poundland is Harry Tuffins. Managing director Paul Delves tells C-Store: "We have been selling £1 lines for about 15 years now. We certainly were one of the first."
The independent retailer with seven stores in the Midlands sells some 4,000 lines ranging from food and gardening to cosmetics and car accessories under its Quids In concept. Paul says that all seven stores have designated Quids In areas, as well as strategically placed £1 products around the store. His best regular sellers tend to be household products such as toilet rolls, kitchen towels, household cleaners and pet accessories.
Meanwhile, London-based cash and carry operator Dhamecha has a permanent line of products that retail for £1. The range includes big-name household brands such as Aquafresh, Colgate, Pledge, Carex, Nivea and Johnsons.
And Hancocks Cash and Carry is offering a range of confectionery products retailing at £1. Kinder Bueno three-pack, Liquorice Allsorts 300g carton, and Flying Saucer cone are just three lines suitable for a £1 promotion.
It seems everyone is jumping on the bandwagon, but is £1 promotion here to stay? HIM's Mike Greene reckons so. "Pound promotions will continue to be popular beyond the end of the current economic conditions," he says. "People will be changed for many years to come."
Research by food and grocery expert IGD reveals that more than a quarter (27%) of shoppers in Europe have made changes to their food and grocery shopping due to the recession. Joanne Denney-Finch, chief executive of IGD, says: "Shoppers are shopping around more, wasting less, seeking out promotions, planning meals and taking their time to find deals."
Shopper research company HIM's Recession Study, which polled a nationally representative online sample of 1,017 UK adults, backs up IGD's findings. It found that 56% of shoppers are shopping around for the best price or promotion on food, 57% check food and drink prices before buying, and 44% are collecting money-saving vouchers and tokens.
While promotions have always been a vital ingredient in a successful convenience store, the 'buy one get one free' and 'when it's gone, it's gone' deals are being firmly pushed to one side as the £1 offer stakes its claim as the king of promotions. As HIM chief executive Mike Greene says, shoppers want what they need for less rather than buying more than they need.
"Retailers have seen promotion penetrations increase year on year and I believe it is due to a combination of increased value demand and the fact that retailers have been more focused on money-off and value rather than multi-buy," he says.
The £1 mechanic resonates with shoppers because it's easier to add up and people often have a pound in their purse, adds Greene. "C-store shoppers have limited time in-store. Pound promotions are easy and quick to understand, and can be purchased with pocket change."
Retailer Poundland has been at the forefront of the £1 offer since it opened its first store in 1990. But if its latest financial results are anything to go by, it has shifted up a gear in the current economic climate. Operating profits were up 47% to £11.8m in the year ending March 2009, and like-for-like sales were up 2.1%. The retailer now runs 217 stores, with 250 expected to be in operation by the end of the year.
Poundland chief executive Jim McCarthy says: "The economic climate is forcing people of all demographic groups to think about how carefully they spend their money. That and the perceived value of a single price point is a compelling combination."
The retailer sells products across 16 categories and is rolling out the sale of two-litre milk bottles and a range of 10 sandwiches. The retailer has developed exclusive packs in partnership with suppliers to offer shoppers difficult-to-beat value. For example, a 1.5kg pack of sugar has a price-per-kilo value of 67p, compared with about 93p in most food stores, according to McCarthy.
Symbol groups and wholesalers have been helping convenience retailers compete with this level of value with £1 initiatives of their own. Spar wholesaler Blakemore, for example, has developed the Pounds Down concept with household products and toiletries, and according to Julie Sharpe, manager of Tates Spar in Sleaford, Lincolnshire, it's going down a storm.
"These pound stands have really boosted our promos," she says. "The deodorants and household products are on a pound stand next to the fruit and veg. People see the pound sign and they immediately think they're getting a bargain."
Musgrave has been ramping up sales of fresh produce by up to six-fold in Budgens stores, and is rolling out the £1 promotional offers to Londis retailers, too. Sales of grapes and potatoes increased by 300% and mushroom sales rose by a whopping 600% in Budgens stores.
The £1 deals are supported with a pos package that includes banners, wobblers, hanging arrows and posters. At least five fresh produce items will be available every three-weekly promotional period for £1, and the offer is flagged up on consumer leaflets.
Kevin Whalley, who runs the Budgens stores in Chalfont St Peter, Bedfont and Langley, says: "This is a fantastic tool to drive sales and volume and at the same time give customers just what they're looking for. It gives the perception of great value and we've seen huge uplifts in sales as a result."
Distributor DCS has developed the Poundzone initiative, giving convenience retailers the chance to source household and toiletry products to sell for a pound through a number of wholesalers including Hyperama, Parfetts, Palmer & Harvey and Blakemore. The products include big brands as well as DCS's own label Enliven. Some of the best discounts have included Palmolive Handwash Hygiene Plus 300ml, which usually retails at £1.72, and Comfort Vaporesse one litre, whose normal rrp is £1.69.
Sales of Enliven, which includes liquid handwash, shampoo, conditioner, styling products, shower gel, hand sanitiser, and a range of men's grooming products, have grown by 63% in the first six months of 2009, and stores who take on the Poundzone concept are "enjoying good incremental growth", says David Hughes, category manager at DCS.
"It's the perception of value," he says. "Let's face it, you can't buy much for £1 anymore not even a coffee so when customers are increasingly shopping in high street stores where every product is on sale for £1, they are attracted to the same initiatives in a c-store."
One independent retailer which has been flagging the £1 price level for almost as long as Poundland is Harry Tuffins. Managing director Paul Delves tells C-Store: "We have been selling £1 lines for about 15 years now. We certainly were one of the first."
The independent retailer with seven stores in the Midlands sells some 4,000 lines ranging from food and gardening to cosmetics and car accessories under its Quids In concept. Paul says that all seven stores have designated Quids In areas, as well as strategically placed £1 products around the store. His best regular sellers tend to be household products such as toilet rolls, kitchen towels, household cleaners and pet accessories.
Meanwhile, London-based cash and carry operator Dhamecha has a permanent line of products that retail for £1. The range includes big-name household brands such as Aquafresh, Colgate, Pledge, Carex, Nivea and Johnsons.
And Hancocks Cash and Carry is offering a range of confectionery products retailing at £1. Kinder Bueno three-pack, Liquorice Allsorts 300g carton, and Flying Saucer cone are just three lines suitable for a £1 promotion.
It seems everyone is jumping on the bandwagon, but is £1 promotion here to stay? HIM's Mike Greene reckons so. "Pound promotions will continue to be popular beyond the end of the current economic conditions," he says. "People will be changed for many years to come."
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