Pet food and petcare were the least promoted categories, a new study has found, with just 21.2 percent of all products sold on promotion.
The latest study released by IRI into the use of promotions by FMCG manufacturers and retailers across Europe, highlights a drop in the proportion of FMCG products sold on promotion.
The IRI Price and Promotion in Western Economies report claims that the proportion of FMCG volume sold on promotion in supermarkets across Europe declined by -0.7 points, compared to the previous year which registered 28.1 percent of sales purchased where trade promotions were available.
IRI believes that this indicates the first serious pause in promotional escalation seen by the region since 2012 and is a sign that manufacturers are evaluating whether the high cost of promotions gives them sufficient returns in the form of increased sales and profit.
The proportion of non-food volume (personal care, household and petcare products) in Europe bought on promotion remained stagnant at 30.0 percent, a 0.1 point decrease.
While manufacturers are using promotions less, when they do engage with shoppers in a battle over price they are often providing better (deeper) offers meaning the overall amount that has been saved by consumers from promotions is relatively unchanged.
The IRI report highlighted noticeable increases to the depth of deal in Netherlands, Spain and the UK.
Off shelf display promotions, popular in the UK and France, have also increased in the last year.
Tim Eales, strategic insight director at IRI UK and author of the report, said: “Retailers rely on manufacturer promotions to increase store footfall but manufacturers cannot afford to play the promotion game any more.
“We expect that more brands will follow by redirecting their marketing spend from consumer promotion to activities that communicate brand benefits such as advertising, as well as new product development.
“Marketers are more alert to the detrimental impact that continuous promotions can have on their brand equity.
“Further, using advanced predictive analytics, IRI Analytics Advantage, has shown that promotions do not usually drive category value sales growth but merely switch volume between brands at reduced prices.
“Consumers are trained to look for deals in store and concentrate their purchasing on promotional events. They do not necessarily generate new sales. This year’s Price and Promotion in Western Economies report highlights a tipping point in the use of promotions by manufacturers.”
Eales concludes: “It’s not all doom and gloom when it comes to promotions.
“We may be at a tipping point but many promotions can have a positive impact on revenue when they are executed in the right place at the right time, helping to grow a retailer’s business, and excite the shopper.
“The key is identifying promotions that genuinely drive sales and provide a win-win situation for retailer, manufacturer and the shopper.”
