Supermarket promotions have fallen to their lowest level in a decade as stores come under pressure to be more transparent in their pricing.
New figures from IRI, which analysed over 300 categories in major retailers, revealed that there has been a 25 per cent reduction in the number of items on offer in stores since November 2012, when the Office of Fair Trading first released guidelines on promotions.
The average number of grocery lines on promotion has fallen by 13 per cent this year, with the volume sold on deal also declining by 6.4 percentage points. It is now at its lowest level for almost 10 years.
IRI said the amount saved by shoppers compared to buying at full price - known as 'promotional giveaway' - fell to just 11.1 per cent by Apri this year from a previous high of 13.9 per cent. That represents a total loss of £3.7 billion in savings.
Despite that, however, retailers and suppliers have been investing some of those promotional savings in keeping everyday prices as low as possible. The study shows that bases prices are falling for the most promotionally responsive categories, despite currency and cost price pressures, and are down 2.3 per cent for brands and two per cent for own label.
But prices have been rising for products in categories least responsible to trade promotions since last October - up 3.5 per cent for brands and 1.7 per cent for own label.
Tim Eales, strategic insight director for IRI and co-author of the study, said: “Retailers and suppliers have been under pressure to change the way they do promotions, notably from the OFT, now CMA, who set out guidelines around pricing transparency a few years ago.
'We’ve also seen market share gains from discounters with their simplified approach to pricing, along with changing shopper habits and, more recently, increased cost pressures, such as the impact of sterling devaluation on manufacturer and retailer margins.
“While our study shows little change in the level of promotions until 2015, retailers are now moving away from the short-term benefits of tactics like multibuys and price cuts to get customers through the doors, and replacing them by fewer promotions, driven by a need for more promotional efficiency and effectiveness.
'Our advice is to look for categories where the sales uplift from individual products on promotion delivers benefits for the category as a whole, meaning a win-win for both supplier and retailer.”
