Promo Dynamic – Was Asda’s promo blitz the prelude to a price war?
The Grocer
The price war announced by Morrisons CEO, Dalton Philips, two weeks ago appears to have got off to a slow start. This has lead to more than one rival supermarket to question whether this is anything more than the regular “cut and thrust” of supermarket price & promotion antics.
Philips promised to run fewer but more targeted promotions. The latest Grocer 33 pricing survey (pxx) actually shows an increase in the number of promotions but not much in the way of the deeper discounts Philips was promising on targeted lines. There was also little sign of an impending price war in the featured space promotions of Morrisons in the four weeks up to 16 March (the Morrisons announcement was on 13 March).
We provided data to The Grocer in order to identify the number of monthly instore promotions. Our analysis revealed that these stayed flat
- Asda, despite its EDLP mantra, led the way in increasing promotions year on year. With 230 more deals, that represents a massive 13.6% upswing (although it still runs fewer than its big four rivals).
- Sainsbury’s, which leads the pack in terms of volume on deal, also increased promo activity, up 10.3% to 2,704 – a figure offset by a typical average saving fall of over 300 basis points.
- Promos at Morrisons trailed some way behind, up 4.87%. The average saving also fell, albeit by a smaller amount.
- Although Tesco did not significantly increase the number of promotions, the typical average saving rose to 33%, up 150 basis points year on year. They are also showing a decrease in the average starting price, compared to the previous year.
- Waitrose is the best-performing traditional supermarket – they actually reduced the number of deals. However, of the top six, Waitrose was the only retailer to offer greater savings compared with both last month and last year. This suggests Waitrose is reacting to changing customer needs. Along with Tesco, Waitrose are also showing a decrease in the average starting price, compared to the previous year.
Assosia’s MD, Kay Staniland, belivels that “this is an indication they are taking the price war seriously.”
| 4 weeks to 16th March 2014 | ||||||
| Asda | Co-op | Morrisons | Sainsbury’s | Tesco | Waitrose | |
| Number of offers | 1918 | 798 | 2219 | 2704 | 2248 | 1173 |
| Number last month | 1873 | 796 | 2216 | 2693 | 2228 | 1172 |
| % change m-o-m | 2.40% | 0.25% | 0.14% | 0.41% | 0.90% | 0.09% |
| Number last year | 1688 | 980 | 2116 | 2452 | 2239 | 1180 |
| % change on last year | 13.63% | -18.57% | 4.87% | 10.28% | 0.40% | -0.59% |
| Average start price (£) | £3.41 | £3.95 | £4.55 | £5.94 | £4.01 | £6.59 |
| Typical Average £ saving | £1.36 | £1.60 | £1.85 | £2.34 | £1.69 | £2.22 |
| Typical Average % saving | 27.64% | 34.65% | 35.14% | 31.10% | 33.04% | 31.38% |
| Average % saving last month | 27.57% | 38.07% | 36.50% | 31.36% | 33.42% | 29.47% |
| % savings change m-o-m | 0.25% | -8.99% | -3.73% | -0.81% | -1.12% | 6.47% |
| Average % saving last year | 28.13% | 36.02% | 35.45% | 34.89% | 31.51% | 30.01% |
| % savings change on last year | -1.74% | -3.78% | -0.87% | -10.86% | 4.85% | 4.56% |
| Current Brand:own-label ratio | 84:16 | 74:26 | 88:12 | 78:22 | 80:20 | 81:19 |
| Ratio 1 year ago | 85:15 | 78:22 | 86:14 | 74:26 | 82:18 | 81:19 |
| Average % saving (branded) | 28.88% | 37.45% | 36.33% | 32.32% | 35.08% | 31.41% |
| Average % saving (o/l) | 20.29% | 26.72% | 26.33% | 26.74% | 25.04% | 31.25% |
Published in The Grocer, 28 March 2014