It labelled promotions “weapons of mass distraction” last April, but after a period of muted promotional activity, Asda has put its foot on the gas again with the upshot that deals are up a whopping 24.1% year on year.

Asda is not alone in upping the promotional ante. With sales flat and the economy fragile, the big grocers face the dilemma of deciding whether to cut back on deals to protect margins or increase promotions to entice new shoppers into their stores.

Year on year, the top five supermarkets all plumped for the latter option, reveals the latest Assosia data. Given that the World Cup was taking place last July, this marks quite an escalation in activity.

Asda was by far the most aggressive, although Tesco also increased its deals significantly, by 12.8% year-on-year. Deals were up 4.4% or less at the other three. Month-on-month, the picture was more mixed. While Asda increased its offers 14.2% to 1,656, Morrisons’ and Tesco’s increases were far more modest at 3.7% and 0.2% respectively and both Sainsbury’s and Waitrose reduced their offers.

Asda has also changed the focus of its promotional activity, switching from alcohol to impulse. Last month, impulse offer numbers were up 4.4% year-on-year while deals on beers, wines and spirits were down 9.4%.

The reduction in alcohol deals at Asda had a noticeable impact on the promotional category numbers across the supermarkets. Wine still by far the biggest category for deals dropped to 16.6% of all deals in July from 19.1% last year. The only category to see a bigger reduction was crisps, nuts and snacks.

Asda favoured the ‘save’ mechanic last month, with the number of such deals up 22.2% on last year. However, it was not the most generous in terms of the size of saving on offer. The average saving was £1.10 the lowest offered by the top five supermarkets surveyed.

Morrisons operated a similar strategy to Asda last month. It focused on ‘save’ offers, running 17% more than last year. And, like Asda, it decided to increase its focus on impulse deals, with these up 4.8% on last July.

Waitrose went in the opposite direction to Asda and Morrisons. The supermarket cut its impulse offers and increased the number of deals on beers, wines and spirits by almost 9%. The only other grocer to do the same was Tesco, which increased its alcohol deals 9.5% and reduced impulse offers 2.4%.

Published in The Grocer, 06 August 2011

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