The number of supermarket promotions has fallen to a 10-year low as a result of pressure on UK retailers to be more transparent in their pricing, according to a new report by industry analysts IRI.
IRI’s Price and Promotion study revealed a 25% reduction in the number of items on offer in stores since November 2012, when the Office for Fair Trading first released its guidelines on promotions.
In 2017 shoppers will receive £3.7bn less in promotional savings, with the average number of grocery lines on promotion down by 13%.
Volume on deal (VOD) has also dropped by 6.4 share points, the fastest since it started declining in 2014, and is now at its lowest level for almost a decade, IRI said.
It found that sports drinks, chocolate and shampoo – categories in the highest Category Promotional Uplift group – were twice as effective on promotion than categories in the lowest CPU group, which include the likes of salt, light bulbs and sun care.
However, levels of multibuy sales have fallen across the board, but more among categories in the highest CPU group. IRI figures show that the volume sold through multibuys fell within the major multiples from 14.0% in the year ending May 2016 to 9.0% in the year ending May 2017.
Tim Eales, strategic insight director for IRI and co-author of the study, said: “Retailers and suppliers have been under pressure to change the way they do promotions, notably from the OFT, now CMA, who set out guidelines around pricing transparency a few years ago.
“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.
“While our study shows little change in the level of promotions until 2015, retailers are now moving away from the short-term benefits of tactics like multi-buys and price cuts to get customers through the doors, and replacing them by fewer promotions, driven by a need for more promotional efficiency and effectiveness. Our advice is to look for categories where the sales uplift from individual products on promotion delivers benefits for the category as a whole, meaning a win-win for both supplier and retailer.”