The baby category has offered two contrasting tales over the past 12 months.
In terms of the average cost per item across babyfood, milk and nappies, retailers appear to have done a stellar job of keeping the lid on price inflation. The average item now costs £3.02, up by just 2% from £2.97 in 2011 [BrandView.co.uk y/e 13 February 2012]. But look more closely at the hot products - those stocked by all mults and are subject to price guarantee and brand-matching initiatives - and prices have moved up significantly more.
In fact, the 67 identical products across babyfood and milk that are stocked by Tesco, Sainsbury’s, Asda and Morrisons are now, on average, 7% more expensive than they were this time a year ago.
When also taking Waitrose into account, the price differential between the cheapest and the most expensive retailer for identical branded products has narrowed from 10% to 1% over the past 12 months. This time last year, the average price at Waitrose was £4.13 for those products, and £3.72 in Tesco now, there’s just 4p difference between the most expensive and the cheapest.
Wholesale prices: packaging materials
The weak economic outlook in Western markets coupled with fears of lower global demand have sent prices of packaging materials tumbling downwards in the past year.
Plastics prices tend to be linked to the price of crude oil, and as global demand for oil has dipped over the past 12 months - driven by economic gloom but also the mild winter - so have prices for key plastics. At present, polystyrene is down 13.2% year-on-year to £1,369/tonne, and polypropylene is down 11.6% to £1,127/tonne. Prices have been starting to pick up again in the past month, with the exception of LDPE, and some forecasters are expecting sharp rises in plastics costs this month. This is driven, in part, by crude and other input prices moving upwards again, as well as by the recent depreciation of the euro against the dollar.
Steel prices are also up by 16.5% to £534.7/tonne - following better-than-expected US economic data.
By bringing its prices down to the level of the other mults, Waitrose has certainly erased the premium customers previously had to pay for baby products also sold by its rivals. But shoppers at the big four may find themselves worse off as a result of price-matching.
Of those that brand match, Sainsbury’s increased prices by 3% and Tesco and Asda each increased theirs by 6%. This means each can claim they are not significantly pricier than their rivals - because they’ve all bumped up prices.
Sainsbury’s promoted the most over the 12-month period, and accounted for 33.2% of the 9,169 promotions in the five retailers. This was largely due to two one week baby events in March and September, which slashed a third off the price of all baby toiletries, wipes, nappies, accessories and food, and a further event last month.
Sainsbury’s needs to woo parents more than most. Like all supermarkets, it overtrades in baby care, but at 121%, it lags behind Asda’s 161% and Waitrose’s 183% [Kantar Worldpanel 52w/e 30 October 2011]. And the big ticket promotions are paying off. In the 12 weeks to 25 December, Sainsbury’s spend share grew by 1.5 percentage points, while the shares of Tesco, Asda and Morrisons fell [Kantar].
Waitrose also ran a third-off promotion on all baby products, excluding formula milk. At three weeks, its event lasted longer than Sainsbury’s. Waitrose’s average unit price edged up 15% when the deal ended on 26 April, but this was in part down to the new listings of 10 big packs of nappies.
Overall, nappies were the most heavily promoted products - between them, Pampers and Huggies accounted for 40.9% of all promotions in the baby category.
No comments yet