Record levels of promotions fail to lift grocery sales

According to Nielsen figures, 37% of all grocery sales by value were on promotion in the period.

Nielsen senior manager retailer services Mike Watkins said: “We saw unprecedented high levels of promotions in our stores last November as the Christmas sales push peaked at just over 36% but this month’s figures top even that - 8 weeks earlier than last year’s seasonal peak.” 

Grocery sales by value increased 4.1% in the 4 week period, largely driven by food inflation. Volume sales rose just 0.4%. 

Morrisons was the best performing of the big four supermarkets, with sales by value growing 5.2%, followed by Sainsbury’s, which notched up a 5.1% rise. Tesco grew sales by 3.9% and Asda by 3.4%.

Co-op increased sales by 20%; Marks & Spencer grew sales 8.3%; Waitrose sales by value increased 9.4% and Iceland by 11.5%.

Watkins said: “We can see that the rising cost of groceries has pushed value sales growth over the 4% mark once again.  It will be worrying to those in the industry to see negligible volume growths coming out of a month where we have seen huge levels of fmcg promotions and it’s almost the case of running hard to stand still at present.”

He added: “All major supermarkets are increasing the level of in store promotions - double loyalty points and money off voucher schemes are no longer the differentiators that they were 12 months ago.  This coupled with the fact that Sainsbury’s, Waitrose and M&S are now all in good solid growth indicates that we could well see food retailers focussing on range and quality in addition to value for money in the run up to Christmas 2010.”

Nielsen said the amount sold on promotion has been “steadily rising for a decade but has increased dramatically since the credit crunch and recession hit”.

In September 2006 26.5% of supermarket spend was sold on some sort of offer.  This rose to 29% by September 2008 and by last year was at 34.5%.