The Co-operative Group’s food boss Steve Murrells is hoping its latest money-off voucher - offering £5 off a £20 shop - will help the society build momentum after reporting better-than-expected third-quarter trading results.
The Co-op Group this week revealed like-for-like sales growth of 1% for the 13 weeks to 4 January despite the bad publicity resulting from the turmoil in its bank business and its decision to scrap the interim dividend.
Murrells told The Grocer the voucher - which rolled out on New Year’s Day and gave £5 off their next £20 shop until 14 January to shoppers who spent £20 - followed the success of its Christmas voucher, offering 10% off every time members spent £5 or more.
“Our Christmas voucher absolutely flew,” he said, “with 70% of members redeeming the coupon, which is unheard of. It showed us the power of couponing. January is a difficult month for consumers and we wanted to do something different than price cuts.”
Murrells added redemption levels for the new voucher were currently running at around 10%, a figure he expected would continue to grow. “The most important lever we will be pulling this year is price. We need to remove price as a barrier and we will look to develop this and understand what we can do,” he said.
The Co-op’s voucher was “bold and audacious” because it would encourage repeat visits and boost basket spend, added Bryan Roberts, director of retail insights at Kantar Retail.
Although the society’s Q3 results were a shock to the industry after it entered the crucial Christmas period with sales down 0.7% in the 12 weeks to 8 December [Kantar Worldpanel], Murrells claimed that, based on IGD figures, it has been outperforming the industry since September. Like-for-likes were also currently running at 1%. “We’re seeing the start of the recovery,” Murrells claimed. “It’s the start of a long race but I’m really pleased these results are on the back of us doing the things we said we would - better products, better prices and better shops.”
The voucher has been introduced to keep shoppers spending in the traditionally quiet January, as rivals introduced new January sales promotions.
Asda claimed last week’s £50m investment on first quarter price cuts - including a number of 50p SKUs - was its “biggest-ever January value campaign”.
“With hundreds of products at 50p, we’re even making the Poundshop and Aldi look expensive,” said Asda chief merchandising officer Barry Williams.
In contrast, a new year’s Morrisons campaign called Prices Nailed Down to Stay Down Week In Week Out is limited to 14 staples. including milk, eggs and baked beans. Morrisons said the campaign was open ended and could be extended to further products.
But Roberts described the campaign as “Asda-lite”. “It seems a bit tokenistic to me and is not very compelling,” he said.
Roberts added the most successful promotions were those able to target individual shoppers, such as the vouchers offered by Sainsbury’s and Tesco. “There’s a real advantage in having an individual dialogue with shoppers than offering everything to everyone,” he said.
The success of targeted vouchers was acknowledged by Morrisons CEO Dalton Philips this week, who partly blamed the retailer’s 5.6% fall in like-for-like sales for the six weeks to 5 January on “targeted couponing which was particularly prevalent in the market this Christmas”.
Other January promotions launched include the return of Aldi’s Swap & Save campaign, a free bottle of Champagne for Waitrose.com customers, and Sainsbury’s Make Your Roast Go Further campaign featuring four bloggers.
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