Despite food price inflation starting to fall, continued cost-of-living pressures and stubbornly high grocery prices see UK shoppers increasingly reliant on promotions to keep food bills down. This is according to the latest data from Retail Insight, the leading provider of store operations execution software.
While data released by the BRC and NielsenIQ showed that food price inflation is finally starting to slow, overall food prices are still 9.9% higher than a year ago. This ongoing pressure on household grocery bills is prompting an increasing consumer reliance on promotional and special-buy items.
Original research of over 1,000 UK shoppers by Retail Insight revealed that over a quarter (28%) of Brits’ grocery baskets are now made up of promotional items or goods that are on offer. Millennials were the most likely demographic to shop special-buy items with over a third (34%) of their shopping baskets made up of discounted goods.
With 86% of respondents saying that as inflation has risen, they have become more budget conscious and with 82% trying to reduce food bills to cut outgoings, pricing and promotional sensitivity has risen sharply. Four in ten (40%) now only buy grocery items that are on promotion. Fresh meat is the food category that UK consumers are the most promotionally-sensitive towards, with 30% saying they would be more likely to buy it when on offer, followed by fresh fruit (26%) and veg (24%).
Stubbornly high food prices and growing promotions-sensitivity are also impacting brand loyalty. Three quarters (74%) of those polled by Retail Insight said they have stopped buying some of their favourite branded goods because the price is now too high. Seven in ten (72%) now choose supermarket own label items unless a branded alternative is on promotion, and a further 72% have swapped from branded goods to supermarket own-label in the past year, up +20% since 2022.
Retailers including Sainsbury’s, which invested £560m in keeping prices low over the past two years, and Iceland, which announced it had cut 1,000 weekly shop staples, have responded by focusing on discounts and promotions to win share of wallet. However, despite the increasing dependency on – and sensitivity to – promotions among UK shoppers, many reported issues with the availability and accuracy of promotions available in-store. Almost half (46%) said ‘on-offer’ items were regularly sold out due to high demand, and a further 40% experienced promotional items frequently being out-of-stock on the shelf. A sixth (16%) of shoppers also reported that promotions advertised in-store were out of date.
Paul Boyle, CEO of Retail Insight, commented: “It will be of little surprise, given the economic backdrop, that promotions are an important consideration for shoppers looking to squeeze more out of their household budgets. This means promotional activities are increasingly vital in driving retail revenues, maintaining share of wallet and attracting new customers. Yet, due to poor inventory levels, limited compliance metrics and manual checks, less than 50% of in-store promotions are implemented to plan, with poorly executed promotions disappointing customers and potentially leading to lost sales, while straining relationships with manufacturers and suppliers.”
PromoInsight is a cloud-based compliance solution that optimises promotional activity. Powered by cognitive technology, it pinpoints where promotions aren’t performing, detecting underperforming stores, categories and products, and then flagging the most valuable opportunities to the right people. This allows retailers to make instant in-store changes to promotions to keep sales moving forward and customers coming back. It also helps supermarkets nurture CPG brand and supplier relationships by ensuring retailers can deliver growth-focused seasonal promotions.