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HomeMarketingConsumer spending on grocery promotions up by nearly £600m versus 2023

Consumer spending on grocery promotions up by nearly £600m versus 2023

Consumer spending on promotions and deals increased by 4% compared to last year in the four weeks to 18 February 2024, according to figures from Kantar.

This amounted to an extra £586m spent over the period versus the same month in 2023.

Retailers have been investing heavily in discounts to entice price-sensitive shoppers. Tesco, Sainsbury’s, Morrisons and Co-op all run promotional offers exclusive to their loyalty scheme members, for example.

According to Kantar, Sainsbury’s and Iceland were the only retailers to attract more shoppers through their doors in the period, suggesting their promotional activities is appealing to budget-conscious shoppers.

Sainsbury’s has put a lot of investment into its Nectar Prices initiative in particular. It saw its share of grocery retail spend increase from 15.2% in the 12 weeks to 19 February 2023, to 15.6% in the same period this year.

Sainsbury’s dual focus on premium product and price powers its largest market share gain in a decade

While Iceland brought more shoppers through its doors with promotions like its deals on “lunchtime favourites” and “cupboard essentials” and its sales increased by 2.1%, its market share actually dropped by 0.1 percentage points to 2.3% versus the same month last year.

Overall, the rate of grocery price inflation declined to 5.3% in the four-week period. This represents a 1.5 percentage point decrease versus January levels and is the lowest inflation rate since March 2022.

Increased promotional activity from retailers will have contributed to this lower rate of inflation. Alongside loyalty-specific offerings and standard promotional mechanisms such as buy one get one free deals, supermarkets are also investing in lower prices through price match initiatives.

See also  Tesco CEO claims retailer ‘more competitive than ever’ on value

Each of the traditional big four (Tesco, Sainsbury’s, Asda and Morrisons) now has a price match initiative in place. This sees them guarantee that prices on particular items will be the same or lower than the equivalent available in discounters Aldi or Lidl.

Morrisons CMO: Aldi and Lidl price match is an ‘effective way’ to communicate value

Tesco and Sainsbury’s both price match Aldi, while Morrisons and Asda have recently launched initiatives to match both Lidl and Aldi, whichever is cheaper.

These initiatives have become more prominent in recent years as Aldi and Lidl gained market share during the cost of living crisis.

While the traditional big four have all tried to match the discounters’ prices on particular lines, it has not stemmed the growth of Lidl and Aldi. Lidl was the UK’s fastest-growing grocery retailer for the sixth month in a row. It grew sales by 10.9% over the 12 weeks to 18 February taking its share of the market to 7.5%. Aldi also grew sales ahead of the market meaning it maintains its 9.4% share.

Another behaviour that cemented itself during the cost of living crisis was consumers opting to buy own-label instead of brands. Even as inflation begins to ease this behaviour appears to be sticking, with private label growth of 5.5% beating the growth of 5.3% seen in branded products.

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