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Promotional Analysis UK Grocery Promotional Report July 2020
Promotional Analysis
UK Grocery Promotional ReportJuly 2020
Contents
1. Introduction
2. UK Promotional Landscape Overview - Total promotional participation- Promotional participation by retailer- Promotional participation by sector- Promotional shifts by category
3. Price & Promotion Spotlight: Health, Beauty & Personal Care - Promotions analysis
4. Summary & Supplier Recommendations - July summary & recommendations
CONTENTS
UK Promotional Report 2
Data in this report is sourced from Edge by Ascential Price & Promotion. Throughout, we refer to “promotional participation” - this is the share of all available listed lines that are on promotion in a given period.
To explore deeper insights for your category, please speak to your account manager or email [email protected]
The role of promotions in a changing retail landscape UK grocery retailers have faced significant disruption in the first half of 2020, with changing patterns of consumer demand resulting from COVID-19.
Going forward, intermittent lockdowns, a recessionary economic outlook and consumer uncertainty will continue to influence price and promotion decisions across the sector. We expect promotions to be used more strategically by retailers to manage demand, drive value perceptions and foster consumer loyalty.
In this new UK Grocery Promotional Report, we provide insight into the evolving promotional landscape across the UK, in order to equip retailers and suppliers with insights to inform future promotional strategies, in particular:
• Industry shifts in promotional participation over time, and how competitors are evolving their promotional strategies
• The promotional mechanics being utilized and gaining momentum
• Promotional dynamics by product sectors and categories
INTRODUCTION
UK Promotional Report
Our promotional analysis is based on the following categories:
3
Beers, Wines & Spirits
Beer, Lager, Ale and Cider
Ready to Drink
Red Wine
Rose Wine
Spirits
White Wine
Cold DrinksCarbonates
Chilled Coffee And Tea Drinks
Coconut Water
Energy Drinks
Flavoured Water
Juice Drinks and Smoothies
Milkshakes
Squash
Water
Snacking
Ambient Dips
Biscuits
Cakes and Cookies
Cereal Bars
Chocolate
Crisps
Gum & Mints
Nuts, Seeds and Dry Fruit
Popcorn
Savoury BiscuitsSnacks
Sweets
Trail Mix
Cereals
Hot Cereal
Ready to Eat Cereal
Bakery
Wrapped Bakery
Hair Care
Hair Accessories
Hair Colorants
Hair Styling
Hair Treatment
Shampoo and Conditioner
Dental
Dental Hygiene
Electric Toothbrushes
Mouthwash
Toothbrushes
ToothpasteHealth & Vitamins
Health & Vitamins
Kitchen Towel & Tissues
Facial Tissues
Kitchen Towel
Toilet Tissue
Laundry Detergent
Fabric Conditioner
Pet Food
Dog Food
Cat Food
Food BeveragesHealth, Beauty &
Personal CareHousehold &
Petcare
About this report:
• Data is sourced from Edge by Ascential Price and Promotion
• We analyse a selection of 6 leading grocery-relevant retailers in the UK, in order to provide a broad representation of promotional activity within the market. Data shown is based on their online operations only, as a proxy for promotional activity more widely.
• Approximately 50 categories (see below) are included in the analysis across a selection of food and non-food grocery categories, and are provided as a consistent sample to broadly represent wider promotional trends.
• Promotional data is collected on a weekly basis, with some data points averaged to reflect monthly or periodic trends.
Online Retailers Analysed*:
*Online operations only
UK Promotional Landscape Overview
UK Promotional Report 4
27.8% 28.0%
35.9% 34.8%
31.7% 28.4%
21.0% 20.8%
30.1% 26.8%
24.3% 26.7%Food 22.2% 21.3%
Beverages 30.5% 30.0%
Health, beauty & personal care 40.2% 36.2%
Household & petcare 25.9% 26.1%
Promotional Summary for July:
PROMOTIONAL LANDSCAPE OVERVIEW
UK Promotional Report
Summary
5
Average % of range on promotion – Total
Average % of range on promotion –Categories
Previous month Latest month
Average % of range on promotion – Retailers
Previous month Latest month• Promotional participation is at 27.3%
for the last four weeks, a decline of 1.3ppts versus the previous month. 27.3% still remains significantly higher than the low of 16.3% during the COVID-19 lockdown.
• Price cuts and multibuys declined at a similar rate in July, with price cuts remaining the favoured mechanic amongst UK grocers.
• Health, Beauty & Personal Care was the highest promoted sector this month, with 36.2% of lines on promotion. Household & Petcare was the only sector to see an increase in promotions versus last month.
• Most retailers reduced online promotions this month, with the exception of Asda and Waitrose.
Key Takeouts for July
Previous month Latest month
TOTAL 28.6% 27.3%
Price Cuts 16.4% 15.9%
Multibuys 11.3% 10.4%
Latest month = 4 weeks to w/c July 27th 2020. Arrows denote increase or decrease in promotional participation vs previous month.
PROMOTIONAL LANDSCAPE OVERVIEW
UK Promotional Report
Promotional participation stands at 26.9% for the latest week, up 5.1ppts versus the same week a year ago
Promotional participation online is now higher than the same period last year • Promotional participation for the latest week
(w/c 27th July 2020) stands at 26.9% across the retailers analysed. This is an increase of 10.6ppts since w/c 13th April (which was lower due to the COVID-19 lockdown), and an increase of 5.1ppts versus the same week a year ago.
• Price cuts and multibuys have followed a similar trajectory over the past year, with price cuts the more popular mechanic, with 15.6% lines using this mechanic versus 10.1% using multibuys in the latest week.
Implications for Retailers & Suppliers:
Retailers and suppliers should consider the growing role of promotions to drive volumes and market share in a recessionary environment.
Total
6
Total US includes all retailers analysed. % on promotion = Number of lines on promotion/total number of available lines. Total line represents Multibuys, Price Reductions + Other Promotions *Key categories are displayed on page 3
21.8%
26.9%
12.9%
15.6%
8.3%
10.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Weekly % of range on promotion – Key categories*
Total Price Cuts Multibuys
Previous 4 Weeks (Total % on promotion)
Latest 4 Weeks(Total % on promotion)
28.6% 27.3%
Source: Edge by Ascential Price & Promotion.
Morrisons is the highest promoter, while Tesco has reduced promotions this year• Over a third of Morrisons’ lines were on
promotion in the last four weeks. Morrisons has now overtaken Tesco as the highest promoter, with Tesco starting to reduce promotions even before COVID-19.
• Sainsbury’s and Asda remain the most consistent in terms of promotional participation, while Waitrose and Ocado experienced more pronounced reductions in promotions due to COVID-19. Both have since recovered promotional participation.
Implications for Retailers & Suppliers:
Suppliers should support increased promotional activity from key customers (e.g. Morrisons) in order to shift volumes and drive value perception.
Ensure promotional calendars are flexible in order to respond accordingly to further isolated lockdowns, particularly for the retail customers which were more reactive to COVID-19 (e.g. Ocado and Waitrose).
PROMOTIONAL LANDSCAPE OVERVIEW
UK Promotional Report
Morrisons is the highest promoter online with over a third of its available lines on promotion for the last four weeks
Retailers
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27.1%28.0%
39.7%
34.8%
15.0%
28.4%
19.2%
20.8%
37.1%
26.8%
25.8%26.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
4wk average % range on promotion by retailer – key categories*
ASDA Morrisons Online Ocado Sainsburys Tesco Waitrose
% on promotion = Number of lines on promotion/total number of available lines Key categories are displayed on page 3 Source: Edge by Ascential Price & Promotion.
At the beginning of March 2020, Tesco announced a Price Match campaign with discounter Aldi, shifting towards
more of an EDLP strategy
16.8%
20.9%
25.1%
30.4%
28.6%
33.9%
18.4%
26.0%
0%
10%
20%
30%
40%
50%
60%
29Jul19
12Aug19
26Aug19
09Sep19
23Sep19
07Oct19
21Oct19
04Nov19
18Nov19
02Dec19
16Dec19
30Dec19
13Jan20
27Jan20
10Feb20
24Feb20
09Mar20
23Mar20
06Apr20
20Apr20
04May20
18May20
01Jun20
15Jun20
29Jun20
13Jul20
27Jul20
Weekly % of range on promotion – by category
Food Beverages Health, beauty & personal care Household & petcare
Health & Beauty promotions have increased most following COVID-19 • Over the past year, Health, beauty & personal
care has been the highest promoted category across UK online retailers. This has remained the case following COVID-19, with the category seeing a more pronounced increase in promotions, particularly in June, although they have tailed off in July.
• In July, Household & petcare was the only category to grow promotions month on month.
Implications for Retailers & Suppliers:
Suppliers operating in the Health & beauty category should prepare for further peaks in promotions, particularly as beauty and personal care occasions remain lower than pre-COVID-19, due to the increased time spent at home.
PROMOTIONAL LANDSCAPE OVERVIEW
UK Promotional Report
Health, beauty & personal care is the highest promoted category, with 33.9% of available lines on promotion for the latest week
Sectors
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% on promotion = Number of lines on promotion/total number of available lines
Source: Edge by Ascential Price & Promotion.
Monthly comparison of promotional dynamics by category
PROMOTIONAL LANDSCAPE OVERVIEW
UK Promotional Report
Categories
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Food Beverages (BWS + Soft Drinks)
Health, Beauty & Personal Care Household & Petcare
7.4%
2.2%
1.6%
Popcorn
Wrapped Bakery
Gum & Mints
-4.8%
-5.0%
-11.3%
Chocolate
Cereal Bars
Ambient Dips
Biggest Movers*
Percentages displayed = 4 week average % of range on promotion (to w/c July 27th 2020) and change vs previous 4 weeks.
*Biggest Movers = Top 3 categories increasing/decreasing promotions this month. Charts display ppts change in average % of range on promotion vs previous 4 weeks.
21.3% 30.0% 36.2% 26.1%
-0.9ppts
-0.5ppts
-4.0ppts 0.2
ppts
6.3%
4.5%
2.2%
Flavoured Water
Ready to Drink
Chilled Coffee And TeaDrinks
-3.1%
-3.9%
-4.5%
Spirits
Beer, Lager, Ale and Cider
Energy Drinks
Biggest Movers*
0.4%Mouthwash
-6.4%
-7.5%
-9.4%
Hair Treatment
Toothbrushes
Hair Styling
Biggest Movers*
4.1%
4.0%
3.7%
Detergent
Facial Tissues
Kitchen Towel
-0.8%
-1.9%
Dog Food
Cat Food
Biggest Movers*
Source: Edge by Ascential Price & Promotion.
Spotlight: Health, Beauty & Personal Care
UK Promotional Report 10Total Health, Beauty & Personal Care includes Dental, Haircare and Health & Vitamins
Multibuys are gaining momentum, indicating shifting focus to volume growth • Focusing on the mechanics within the health
& beauty sector, price cuts remain the most popular, with over 85% of the sector’s promotions leveraging this mechanic for the latest week.
• However, the share of promotions on multibuyhas increased over recent weeks, peaking at 17.0% in early July. Versus this time last year, multibuys have also increased, with a 14.7% share of promotions, versus 11.6% last year.
Implications for Retailers & Suppliers:
The growth in multibuys indicates increased focus on shifting volumes, which could be reflective of excess stock following subdued demand in select personal care categories during COVID-19.
Suppliers should continue to monitor trends across promotional mechanics within the sector in order to consider the most appropriate balance between price reductions and multibuys.
HEALTH, BEAUTY & PERSONAL CARE
UK Promotional Report 11Source: Edge by Ascential Price & Promotion.
11.6% 14.7%
88.3% 85.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
29Jul19
12Aug19
26Aug19
09Sep19
23Sep19
07Oct19
21Oct19
04Nov19
18Nov19
02Dec19
16Dec19
30Dec19
13Jan20
27Jan20
10Feb20
24Feb20
09Mar20
23Mar20
06Apr20
20Apr20
04May20
18May20
01Jun20
15Jun20
29Jun20
13Jul20
27Jul20
% of promotions by mechanic – Health, Beauty & Personal Care
Multibuy Price Cut Other
Volume-driving multibuys have seen an increase
over the last few weeks
Retailers have gone earlier with Health & Vitamins promotions this year • The sub categories within Health, Beauty &
Personal Care have all seen an increase in promotions after COVID-19, although this has been particularly pronounced in the Health & Vitamins category. Retailers appear to have gone earlier with their promotional pushes this year, with an uptick occurring in June this year, and being maintained into July.
• Promotions have come down in recent weeks across all sub-categories following the peak in June, but remain higher than last year.
Implications for Retailers & Suppliers:
Prepare for further spikes in Health & Vitamins promotions as consumer demand for health-related products increases in light of the coronavirus pandemic.
HEALTH, BEAUTY & PERSONAL CARE
UK Promotional Report 12
45.2%47.1%
4.0%
14.0%
24.0%
34.0%
44.0%
54.0%
64.0%
29
/07
/20
19
05
/08
/20
19
12
/08
/20
19
19
/08
/20
19
26
/08
/20
19
02
/09
/20
19
09
/09
/20
19
16
/09
/20
19
23
/09
/20
19
30
/09
/20
19
07
/10
/20
19
14
/10
/20
19
21
/10
/20
19
28
/10
/20
19
04
/11
/20
19
11
/11
/20
19
18
/11
/20
19
25
/11
/20
19
02
/12
/20
19
09
/12
/20
19
16
/12
/20
19
23
/12
/20
19
30
/12
/20
19
06
/01
/20
20
13
/01
/20
20
20
/01
/20
20
27
/01
/20
20
03
/02
/20
20
10
/02
/20
20
17
/02
/20
20
24
/02
/20
20
02
/03
/20
20
09
/03
/20
20
16
/03
/20
20
23
/03
/20
20
30
/03
/20
20
06
/04
/20
20
13
/04
/20
20
20
/04
/20
20
27
/04
/20
20
04
/05
/20
20
11
/05
/20
20
18
/05
/20
20
25
/05
/20
20
01
/06
/20
20
08
/06
/20
20
15
/06
/20
20
22
/06
/20
20
29
/06
/20
20
06
/07
/20
20
13
/07
/20
20
20
/07
/20
20
27
/07
/20
20
Weekly % of range on promotion by Sub Category
Dental Haircare Health & Vitamins
Source: Edge by Ascential Price & Promotion.
Health & Vitamins saw a steep increase in promotions towards
the end of September 2020
This year the category saw a similar steep increase, but in
June 2020
* Health & Vitamins excludes OTC and pharmacy
Within Health & Vitamins, Tesco and Asda are the highest promoters• Tesco is a high promoter within the Health &
Vitamins category, with a consistently high share of available lines (c.90%) on promotion, going against its overall strategy of promotional decline since the start of 2020.
• Since December, Asda has been increasing promotions within the category, with over 80% of lines now on promotion. Ocado is the third-highest promoter, and contributed to the uptick in category promotions after COVID-19 due to its more pronounced drop in promotional participation during COVID-19.
Implications for Retailers & Suppliers:
With the health & vitamins category of increasing relevance to consumers, suppliers should plan for a continued promotional push from retailers here.
Retailers to monitor include Asda, which appears to be pushing volumes in the category this year, in addition to Ocado, which has quickly recovered promotions following the drop during COVID-19.
HEALTH, BEAUTY & PERSONAL CARE
UK Promotional Report
Tesco is consistently the highest promoter for Health & Vitamins, followed by Asda and Ocado
Retailers
13
82.4%
14.1%
47.0%
87.7%
2.7%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Weekly % range on promotion by retailer – Health & Vitamins
ASDA Morrisons Online Ocado Sainsburys Tesco Waitrose
% on promotion = Number of lines on promotion/total number of available lines
Source: Edge by Ascential Price & Promotion. * Health & Vitamins excludes OTC and pharmacy
430
212 202
Vitabiotics Own Label Centrum
Top 3 Brands* – Total Number of Lines on Promotion in Health & Vitamins – 4 weeks to w/c 27th July 2020
Vitabiotics leads the category for promotional activity
• Within the Health & Vitamins category, the top three brands for promotions* over the last month are Vitabiotics, Own Label (driven by Tesco) and Centrum. Together, these brands accounted for one third (33.5%) of the category’s promotions over the past four weeks.
Implications for Retailers & Suppliers:
As retailers (particularly Tesco) push own label promotions, suppliers must find other ways to stand out on the digital shelf, either through competing on promotions and value, or through added-value portfolios and innovation.
Multivitamin lines are among the highest promoted across the top brands, reflecting the relevance of this category following COVID-19, and the requirement for retailers and brands to meet increased consumer demand with value offerings.
HEALTH, BEAUTY & PERSONAL CARE
UK Promotional Report 14
Own Label
17.1% of all promotions
8.4% of all promotions
8.0% of all promotions
*Top promoted brands & SKUs are identified by the sum of their promoted lines over the past four week period ending w/c 27th July 2020
Top promoted SKUs Top promoted SKUsTop promoted SKUs
Source: Edge by Ascential Price & Promotion. * Health & Vitamins excludes OTC and pharmacy
Summary & Recommendations
UK Promotional Report 15
Summary & Recommendations
SUMMARY
UK Promotional Report 16
UK online retailers have recovered promotions following COVID-19 • Over the last month, promotional participation stood at 27.3%, up from the low of 16.3% witnessed during COVID-19. Promotions have
reduced slightly (by 1.3ppts) versus June, indicating that the ‘recovery stage’ in promotions following COVID-19 has now passed. However, suppliers will need to ensure promotional calendars remain flexible going forward, in order to respond accordingly to further isolated lockdowns.
Price cuts remain the primary mechanic for UK online grocers• Of the 27.3% of lines on promotion in the past four weeks, 15.9% of these were price cuts, versus 10.4% using multibuys. Both mechanics
continue to follow a similar trajectory.
Morrisons has overtaken Tesco as the highest promoting retailer • In the last four weeks, 34.8% of Morrisons’ lines were on promotion, the highest of all the retailers analysed. Until March 2020, Tesco was
the highest promoting retailer, but this position has now dropped to fourth as Tesco continues to reduce promotional activity over time – a sign that it is shifting to more of an EDLP strategy.
Health, Beauty & Personal Care has seen the biggest spike in promotions following COVID-19, and out-promotes other sectors • Within the sector, Health & Vitamins is the currently the highest promoted category, driven by Tesco (where it is following a different
strategy to its overarching business), Asda and Ocado. Promotional peaks have occurred earlier this year than last, reflecting the increased consumer interest in the category following COVID-19, and the opportunity for retailers to strategically leverage promotions in this category in order to drive volumes and basket size.
Key Takeouts for July 2020
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Company No: 3994702 (England & Wales)-Registered Office: c/o Ascential plc, The Prow, 1 Wilder Walk, London W1B 5AP
Terms of use and copyright conditions: © 2018, Ascential plc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form without our prior permission. Planet Retail, Ascential, and their affiliates are not liable for any omissions, errors or incorrect insertions, nor for any interpretations made from the document.
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