Bakery deals down as supermarket promos fall to lowest level in 10 years

Supermarket promotions have fallen to their lowest level in 10 years, according to a new study.

Growing use of everyday low pricing, as opposed to limited-run promotions, has brought a 25% drop in the number of items on offer in stores since November 2012, researchers at analyst IRI have found.

The average number of grocery lines on promotion this year has declined by 13%, resulting in an 18% fall in consumer savings from promotions compared to 2016. Volume sold on is now at its lowest level for almost a decade.

IRI found that the amount saved by shoppers, had they bought a product at full price (known as ‘promotional giveaway’), fell to 11.1% by April this year from its previous high of 13.9%. This represents a potential loss of £3.7bn in deal savings for consumers.

The promotional giveaway in the bread & bakery category has fallen from 8.8% in the period from February to May 2016, to 7.4% in the same period this year. Promotional giveaway has fallen more steeply in the biscuits category, from 18.3% to 16.4%.

Factors driving the change in pricing strategy have included intense competition from discounters, such as Aldi and Lidl, and the impact of the devaluation of sterling on manufacturing costs and margins. Researchers found there had been little change in the level of promotions until 2015.

Retailers have also come under pressure to change the way they handle promotions, with the Office for Fair Trading releasing its guidelines on promotions in 2012. More recently, the Competitions & Market Authority set out guidelines around pricing transparency.

“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 with fewer promotions, driven by a need for more promotional efficiency and effectiveness,” said study co-author Tim Eales, strategic insight director at IRI.

Retailers have generally been moving away from multi-buy promotions in recent years, and IRI found levels of multi-buy sales had fallen across the board. The volume sold through multi-buys dropped by 14% in the year to May 2016, to 9% in the year to May 2017.

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