Supermarket promos hit lowest level for seven years

Supermarket promotions have fallen to their lowest level for over seven years as the multiples switch to permanent price cuts to combat discounter competition.

In the four weeks ending 23 April 2016, just 29% of spend at UK supermarkets went on products with temporary price cuts or multi-buy offers, the lowest level since February 2009.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “Over the last two years, around 34% of a typical supermarket shopping bill went on promotional items.

“However, to help combat the rise of the discounters, supermarkets are now turning temporary price reductions into permanent cuts. Consequently, there’s now less promotional activity as many prices are cheaper all-year round.”

The figures come as the discounters continue to grow their market share. Aldi and Lidl’s share of the UK grocery market reached 11.5% in the 12 weeks ending 23 April 2016, up 13.9% year on year.

Nearly half of all households now shop at a discounter every month – up from 40% two years ago, and in the 12 weeks to 25 April 2016, sales at Aldi were up 13% on one year ago, while at Lidl they were up 15.3%.

All four of the major supermarkets reported falling sales in the same 12 weeks, with Tesco down 1.1% on the same period last year, and Asda down 6%. Sainsbury’s and Morrisons were also down 0.9% and 2.6% respectively.

The sales figures do not however, include Easter which fell earlier this year.

“Only M&S, Waitrose and the Co-op seem able to fight off the rise of the discounters and attract more shoppers, which is set to become even harder in the second half of 2016 as both Aldi and Lidl open more stores,” Watkins added.

“Looking across the last eight weeks, to negate the Easter impact, value growths were still down 1.3% and volume down 1.1%,” Watkins added.

“Prices are lower than a year ago and there’s been little sales momentum at the supermarkets since Easter, not helped by the cool weather. Some sunshine over the next few weeks could be the kick-start for sales growth the industry needs.”