UK food businesses have put the brakes on promotions – with activity declining more here than in other European markets.

The proportion of food sold on promotion in the UK declined by 3.4 percentage points year on year to 49.8%. But it was still a long way above the 27.7% average for food sales in Europe, according to a study by retail analyst IRI.

The firm’s Price and Promotion in Western Economies report showed that the proportion of all fast-moving consumer goods sold on promotion in supermarkets across Europe fell 0.7 points year on year. Food promotions fell 0.8 points over the period.

IRI described the decline as “the first serious pause in promotional escalation seen by the region since 2012”, adding it was a sign manufacturers were evaluating whether the high cost of promotions gave them sufficient returns.

Deals get deeper

The report pointed out that while manufacturers were using promotions less, they were often offering deeper deals – which meant the overall amount saved by consumers from promotions was relatively unchanged.

In particular, there were noticeable increases to depth of deal in the UK, the Netherlands and Spain.   

IRI also noted a drop-off in the use of multi-buy deals, such as buy-one-get-one-free in the UK, which have fallen from 15.2% of products sold to 11.9%. The report said this had been driven by retailers such as Sainsbury’s abandoning all multi-buy promotions.

“Retailers rely on manufacturer promotions to increase store footfall, but manufacturers cannot afford to play the promotion game anymore,” said IRI strategic insight director Tim Eales, author of the report.

“We expect that more brands will follow by redirecting their marketing spend from consumer promotion to activities that communicate brand benefits, such as advertising, as well as new product development.”

He added that IRI research showed promotions did not usually drive category growth but switched volume between brands at lower prices.

“Consumers are trained to look for deals in-store and concentrate their purchasing on promotional events. They do not necessarily generate new sales.”

Positive impact

Eales said some promotions can have a positive impact on revenue when used in the right place at the right time, however.

“The key is identifying promotions that genuinely drive sales and provide a win-win situation for the retailer, the manufacturer and the shopper,” he added.