Supermarkets are offering shoppers greater savings than at any time in the past three years.

Promotions have deepened year-on-year, with the average saving on a featured space promotion rising more than four percentage points, from 31% in June 2010 to 35.6% in the first two weeks of June this year, according to promotions analysts Assosia.

Hikes in the base price of products had prompted retailers to seek deeper discounts, said Assosia ­managing director Kay Staniland. "As inflation pushes up the prices, deeper discounts are being offered to ensure customers don't have to pay more," she said.

In June 2010, the average price of a product before it was promoted was £4.32 this has fluctuated over the year but currently stands at £4.63.

Supermarket deals are also helping to keep inflation in check. Food prices are up 4% year-on-year, but once the effect of price promotions is factored in this drops to 3% [BrandView y-o-y 5w/e 31 May 2011].

Savings have increased in most product categories but growth has been particularly marked in impulse; meat, fish & poultry; and chilled dairy.

Promotional activity in dairy had been driven by aggressive cheese promotions, industry analysts said, with Cathedral City owner Dairy Crest vowing last month that it would 'not be out-promoted by anybody'.

In the impulse category, the average saving has risen from 30.6% in June 2010 to 38.1% in June this year. This was partly because unlike other categories, it was possible to increase impulse purchases by offering deals, said Colin Seymour, sales strategy & category marketing director at Lucozade owner GlaxoSmithKline.

"The key is to make sure we don't undermine a product's value simply by cutting price," he said.

That was why GSK had tried to add value to Lucozade with an on-pack promotion offering free sport sessions, said Seymour, although this had been supported by a degree of price promotional activity, he admitted. "To get display in stores there is pressure to have a price ­offer," he said.

Fresh produce is one of the few categories where average savings have fallen, from 38.2% in 2010 to 30.5% this year. "There has been a shift away from the bogof deal or buy one watch one rot as I like to call it," explained Kantar Worldpanel director Ed Garner.

Across the grocery market, the depth of saving offered by own-label promotions has outpaced brands, growing by 4.7 perceantage points compared with a 3.9 percentage point increase in branded deals.

The last time promotions were at such a high level was mid-2008, before the recession prompted supermarkets to massively increase their focus on value ranges and lower-priced products.

Read more
Grocer Price Index: Monthly inflation eases as promos mitigate its impact (4 June 2011)
Promo Dynamic: Sainsbury’s in promo lead as focus shifts to own label (28 May 2011)

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