Promotions are back with a bang, but who will buy these brands at the rsp?

Promotions are back with a bang. Over 37,000 products are on offer at the major supermarkets. That’s up 27% vs last year. And it means supermarket promos are now at a higher level than pre pandemic, with deals on a record 33% of items – and 47.8% in this week’s Christmas Party 33.

There are two reasons. First, as our Top Products Survey this week shows, brands are losing volume (-3.6%) in the supermarkets. In fact so is own label (-2%) as shoppers switch to the discounters (or eat or waste less). So they need to act. And second they are able to act because of the fall in input cost inflation (pxx).

Will the deals deliver the volumes brand owners desperately need? They’re banking on it. And one would think they were actually dropping prices. Announcing a 19% H1 trading profits increase last month Premier Foods talked about “a reduction in average prices”. But it was referring to “the opportunity to lower promotional prices”. In other words deeper deals.

That’s no bad thing. While the number of promotions has increased the level of savings has nudged up from 24.6% to 24.7%. Well below the 26.1% average saving pre-Covid.

Question is: even with a bigger saving, are brands helping customers enough if it’s only via promos? It’s a dangerous game, in which some products have been reset at a markedly higher price – 40%, 50% higher, or more – making them unobtainable without a deal for a lot of shoppers. At the same time it means many brand owners are more reliant than perhaps ever before on promotions to drive share and recover lost volumes. Who will buy these brands at the rsp?

And the same is true of the supermarkets. At the start of the cost of living crisis the then Tesco CEO Dave Lewis vowed to end traditional deal activity, with all promotions to be driven exclusively through its Clubcard loyalty card. At the time it was portrayed as a move towards EDLP, with Tesco noting that promotional participation had reduced from 28% to 14%.

As we know now it proved an inspired move, driving incredible engagement with Tesco Clubcard and providing the retailer and its suppliers with incredible insight too.

One wonders what promotional participation is now. But it’s certainly not 14% and with 8,000 items on Clubcard deals right now it’s a lot higher than 28% too.

^{This is the last issue of The Grocer until 13 January 2024, but you can keep up to date with news, views and features at thegrocer.co.uk over Christmas and into the new year. We also have exciting plans for 2024. Entries for The Grocer Gold Awards open 12 January. And check out the speaker programme for LIVE, on 12-13 March, hosted in collaboration with Retail Week.}