Promo Dynamic: Supermarkets pile on promos to win post-Christmas pounds

Remember Philip Clarke’s words after those miserable Tesco Christmas numbers? “We backed off some of our promotional and couponing activity too early.”

Like-for-like UK sales were down by 2.3% over the festive period, a situation Clarke was clearly determined to change. Dashing to win back those it lost over Christmas, Tesco ran a breathtaking 35.1% more promotions in the four weeks to 22 January than it did a year ago, exclusive data for The Grocer reveals.

“Tesco had to up its game,” says Assosia managing director Kay Staniland. “It’s reacted very quickly.” But Tesco is not alone in stepping up the pace on promotions.

January is normally when retailers recover from the madness of Christmas and scale back on deals. And the number of promotions fell month-on-month for all the retailers.

But retailers have allowed themselves little respite in January, as four out of five supermarkets ran more featured-space promotions this month than this time last year. For three, the number was up by double digits. As well as Tesco’s 35.1%, Sainsbury’s and Waitrose ran 19.9% and 16.4% more promotions, respectively.

In the case of Tesco, Morrisons and Waitrose, the average saving also increased year- on year.

In terms of mechanics, Tesco moved to offer more price-cut deals and fewer multibuys. Two in five Tesco promotions were half-price deals in January, compared with 14.8% this time last year. Meanwhile, x-for-y offers accounted for just 23.7% of deals, down from 38.6%.

Asda held fast to its EDLP principles and offered the most money-off deals and fewest multibuys. Waitrose, meanwhile, reached for the bogofs - 11.1% of its promotions were buy one get one free deals this month. Tesco came a close second, with 8.8% bogofs in January, while Morrisons and Sainsbury’s ran bogofs for about 2% of January deals.

“Waitrose is doing a lot more branded promotions,” says Staniland. “The other retailers are competing so strongly on own label that it’s trying to compete in the branded arena.”

Waitrose’s bogofs came primarily from chilled dairy and bathroom categories. Bogofs also crept back into fresh produce aisles, with Waitrose, Sainsbury’s and Tesco offering a handful on fruit and vegetables.