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, 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 per cent 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 per cent) 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 per cent) of their shopping baskets made up of discounted goods.
With 86 per cent of respondents saying that as inflation has risen, they have become more budget conscious and with 82 per cent trying to reduce food bills to cut outgoings, pricing and promotional sensitivity has risen sharply. Four in ten (40 per cent) 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 per cent saying they would be more likely to buy it when on offer, followed by fresh fruit (26 per cent) and veg (24 per cent).
Stubbornly high food prices and growing promotions-sensitivity are also impacting brand loyalty. Three quarters (74 per cent) 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 per cent) now choose supermarket own label items unless a branded alternative is on promotion, and a further 72 per cent have swapped from branded goods to supermarket own-label in the past year, up +20 per cent 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 per cent) said "on-offer" items were regularly sold out due to high demand, and a further 40 per cent experienced promotional items frequently being out-of-stock on the shelf. A sixth (16 per cent) of shoppers also reported that promotions advertised in-store were out of date.
“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," said Paul Boyle, CEO of Retail Insight. "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 per cent 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.”
