the role of price & promotion 2012

www.evolution-insights.com SAMPLE SLIDE

The Role of Loyalty, Price and Promotions – The Shopper’s Perspective 1SAMPLE EXTRACT

Evolution Insights LtdProspect House

32 Sovereign StreetLeeds

LS1 4BJTel: 0113 389 1038

http://www.evolution-insights.com

• Evolution offer a range of products & services for clients in the field of shopper research:-

• Off-the-shelf research

– Evolution’s off the shelf research publications deliver affordable insight into shopper motivation and behaviours in UK food, drink and grocery

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Evolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespoke research for manufacturers, retailers and agencies.

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About Evolution Insights

As a leading publisher of shopper research, we are ideally placed to offer your business actionable shopper insight.

Our research and analysis helps clients develop targeted shopper marketing initiatives designed to influence shoppers at the point of purchase.

We use a range of research methodologies to discover genuine insights. Our research incorporates a broad spectrum of robust qualitative and quantitative research techniques.


Contents


Key findings and executive summary 6The scope of the report 7Key findings and executive summary 8Key findings and executive summary (2) 9Key findings and executive summary (3) 10Key findings and executive summary (4) 11Key findings and executive summary (5) 12Inflation and food retailer price war 13Introduction 14Price wars 15Food price inflation 16Food price inflation (2) 17Summary 18Changing shopping habits and different types of promotions 19Introduction 20Changing shopping habits in recession 21Changing shopping habits in recession (2) 22Savings through trading down 23Price comparison 24Recession 25Money available to spend on food in the last 12 months 26Definition of value – what shoppers want 27Value – relationship between price and value 28Frequently promoted categories 29Number of promotions at different retailers 30Proportion of branded products of all promotions at different retailers

31

Average % saving on branded products on promotion 32Average % saving on own-label products on promotion 33Websites offering vouchers and discount codes 34Voucher code websites 35Price comparison sites 36Why promote – benefits of promotional activity for manufacturers and retailers

37

Summary 38Loyalty in the food and groceries market 39Introduction 40Loyalty cards currently carried around by the shoppers 41Loyalty cards and discount vouchers currently carried around by the shoppers

42

Defining loyalty 43Loyalty cards 44Loyalty schemes 45Tesco Clubcard 46Nectar card 47Boots Advantage card 48Superdrug Beautycard 49Coffee shop loyalty cards 50Other loyalty card schemes 51Summary 52Loyalty and price related drivers for shopping 53Introduction 54Price-related drivers of store choice - in store and online 55Drivers for favouring shoppers’ most used supermarket – in store

56

Drivers for favouring shoppers’ most used supermarket – online 57Summary 58Different types of promotions 59Introduction 60Appeal of different types of promotions – in store and online 61The online grocery shopper: at a glance – drivers of online grocery shopping

62

Online vs. offline deals 63Offer appeal – in store and online 64The most attractive in store promotions by social group – in store

65

The most attractive in store promotions by household type in store

66

Life stage and attractiveness of different promotions – in store 67

Contents


The most attractive in store promotions by social group – online 68The most attractive in store promotions by household type online

69

Life stage and attractiveness of different promotions – online 70Summary 71Understanding promotions 72Introduction 73Figuring out complicated offers 74Lowest price per unit – washing powder 75Lowest price per weight – yoghurt 76Lowest price per item – soft drink 77Percentage discounts 78Summary 79Single item vs. multi-buys – finding the tipping point 80Introduction 81Tipping point for different categories 82Finding the tipping point for bulk-deals – when is it worth it to get two instead of one?

83

There is a loaf of bread available for two for £2 or one for the price below.

84

There’s a box of your favourite washing powder (850g, 10 washes) available for two for £5.50 or one for the price below.

85

A pack of your normal toilet rolls (18 rolls) is available for two for £12 or one for the price below.

86

Tipping point for different product categories 87Summary 88Price expectations in convenience stores 89Introduction 90Convenience store prices 91Convenience store prices – perceptions by age group 92Convenience store prices – perceptions by social group 93Convenience store prices – perceptions by life stage 94Summary 95Deal appeal – determinants of choice 96

Introduction 97Proxy categories for survey questions 98Deal appeal 99Deal appeal – a 4 pint bottle of milk 100Deal appeal – a 4 pint bottle of milk (2) 101Deal appeal – a box of washing powder (850g, 10 washes) 102Deal appeal – a box of washing powder (850g, 10 washes) (2) 103Deal appeal – instant coffee 104Deal appeal – yoghurt 105Deal appeal – beer 106Deal appeal – beer (2) 107Summary 108Multi-buy deals and online grocery shopping 109Introduction 110Willingness to buy in bulk in store and online 111Willingness to buy in bulk in store and online (2) 112Willingness to buy in bulk in store and online 113Bulk-buying online 114Summary 115Different retailers’ current promotional strategies 116Introduction 117Promotions leaving shoppers confused 118The cost of promotions 119Retailer price strategies in 2011 120Asda’s strategy on promotions and pricing 121Shoppers mostly shopping in Asda 122Tesco’s strategy on promotions and pricing 123Shoppers mostly shopping at Tesco 124Sainsbury’s strategy on promotions and pricing 125Shoppers mostly shopping in Sainsbury’s 126Morrisons strategy on promotions and pricing 127Shoppers mostly shopping in Morrisons 128Waitrose’s strategy on promotions and pricing 129

Contents


Shopper perceptions on prices and promotions at different retailers

130

Cheapest retailer in relation to primary store of choice 131Best deals in relation to primary store of choice 132Price matching 133Everyday low pricing vs. promotions 134Discount retailers 135Effectiveness of pricing strategies and campaigns – Christmas performance in 2011

136

Methodology 137Methodology 138Methodology: quantitative survey 139Glossary 140


The economic downturn and food price inflation are challenging household budgets and shoppers need to find ways to cope with the squeeze. This report investigates how shoppers feel about food prices, what kind of promotion types they prefer. We also tested the tipping point for ‘2 For’ offers using a number of proxy categories to demonstrate differences. A complete section of the report is dedicated to testing whether shoppers understand promotions and how they deal with confusing or difficult offers. We also look into the effects on store loyalty when food retailers are at constant war on prices, and what are the price-related drivers of store choice.

The report also provides a good overview of the current promotional strategies adopted by the big four retailers and existing loyalty schemes offered by the fast moving consumer goods retailers.

The understanding of this vital area of shopper understanding places us in a good position to undertake bespoke research at an individual category level.

The scope of the report


The economic downturn has resulted in inflation and

higher taxation which is also affecting food prices. The

cost of food has increased by approximately 5.0% in

the last 12 months. The British Retail Consortium has

however estimated that about 40% of groceries are

bought on promotion. When promotional pricing is

factored in, the cost of food has increased by only 3%

in the last 12 months. According to The Grocer price

Index the cost of food was up by 5% compared to a

year ago and by 4% when promotions were

considered. There is some variation between different

retailers. Whereas Asda shoppers are only paying 2%

more than a year ago, prices in Tesco have gone up by

8%. Promotional activity and discounting isn’t

showing any signs of slowing down though and

promotions appeal to all age and social groups.

Retailers are in constant competition to be the

cheapest. Asda has, however, changed its strategy

and is gradually shifting away from promotions to

everyday low prices. How long the other retailers can

keep going remains to be seen but it is possible that

the impact of promotions is smaller in the future.

The extent of inflation on food prices varies between different retailers and is dependant on promotional activity.

Food price inflation

Mar-

10

Apr-10

May

-10

Jun-1

0Ju

l-10

Aug-10

Sep-1

0

Oct-10

Nov-10

Dec-1

0

Jan-1

1

Feb-1

1

Mar-

11

Apr-11

May

-11

Jun-1

1Ju

l-11

Aug-11

Sep-1

1

Oct-11

Nov-11

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

3.4 3.7 3.3 3.2

3.1 3.1

3.0 3.1 3.23.7 4.0 4.3

4.14.5 4.5

4.2 4.4

4.5

5.25.0 4.8

2.0 2.8 1.8

1.9

3.3

4.1

5.1 4.5

5.56.16.3 6.3

4.64.4

5.8

6.9

6.26.2

6.4

5.0

4.0

CPI (overall index) Food and non-alcoholic beverages

Perc

enta

ge c

hang

e on

yea

r ear

lier


• Majority of shoppers claim to pay more attention to prices than 12 months ago. It seems though that what shoppers say and what they do is different. In reality shopping in convenience stores is on the rise even though shoppers admit convenience stores are more expensive than supermarkets.

• Lots of little shops instead of a big weekly shop expose shoppers more to impulse buying which can increase the food bill.

• There is also a growing trend towards meal for tonight deals at different retailers. Shoppers aren’t planning their shops which is an expensive way of shopping.

Price comparison

Strongly agree

Agree Agree somewhat

Undecided Disagree somewhat

Disagree Strongly disagree

0

5

10

15

20

25

30

3531.9

14.9 14.1

26.5

3.0 2.5

7.0% p

rim

ary

groc

ery

shop

pers

60.9% agree

The majority of shoppers (60.9%) are more price conscious compared to 12 months ago.

I’m spending more time looking at prices in store compared to 12 months ago


Groupon is known by nearly 75% of shoppers whereas the most of the other voucher code websites are unfamiliar to most grocery shoppers. Moneysavingexpert.com is the most used, with 9.5% using it often and 17.5% using it occasionally.

Voucher code websites

Vouchercloud.com

Wow-coupons.co.uk

Mysavings.com

Hotukdeals.com

Livingsocial.com

Wowcher.co.uk

Kgbdeals.co.uk

Myvouchercodes.co.uk

Moneysavingexpert.com

Groupon.co.uk

0 10 20 30 40 50 60 70 80 90 100

83.3

81.5

80.7

75

73.1

71.5

60.4

42.4

39.5

25.6

10.1

13.3

14.2

13.2

16.2

21.3

26.1

30.6

28.3

44.3

2.6

2.9

2.2

2.9

3.8

2.7

4.8

7.1

5.2

8.2

3.6

2

2.4

5.8

5.8

4.1

6.8

16.4

17.5

17.5

0.5

0.4

0.6

3.1

1.1

0.4

1.9

3.5

9.5

4.4

Not aware Aware but haven't tried it Aware, have tried but don't use anymore

Aware and use occasionally Aware and use often

% primary grocery shoppers

Are you aware of the following types of voucher code websites, and if so, have you used them?


Loyalty cards currently carried around by the shoppers

So what’s in your purse/wallet?


There is no real belief that prices are better online than in store. This is interesting because outside the category of food and groceries online prices are absolutely considered cheaper.

Online vs. offline deals

51.6% undecided

20.7% agree

27.7% disagree

Online offers are better than offers in stores

Why aren’t online offers better? For other shopping you can get good bargains

online!

I would shop online more often if the offers were better than in stores.


25 30 35 40 45 50 55 60 65 70 750

10

20

30

40

50

60

70

80

90

100

18 to 24 25 to 34 35 to 44 45 to 54 55 to 6465 and over

£

%

If your shopping came to a total of £50 in your normal supermarket, how much would you expect to pay for the same items in a convenience store?

• Younger respondents (18 to 24) were more likely

to expect convenience prices be lower than in a

supermarket.

• The oldest group expected lower prices than

the younger groups, apart from the youngest

age group.

• The mean averages for different age groups are

• 18 to 24: £54.60 (9.2% more expensive)• 25 to 34: £58.67 (17.3% more

expensive)• 35 to 44: £60.28 (20.6% more



expensive)• 65+: £57.84 (15.7% more expensive)

Majority of shoppers in all age groups expected convenience store to be higher than their normal supermarket prices.

Convenience store prices – perceptions by age group

28.6% of 18 to 24 year olds expected the total price to be less than £50.


• Detailed shopper insights were gained from a survey of 1,007 UK adults who say they regularly shop for food and grocery. The samples were fully representative of the UK population.

• The survey contained 28 questions relating to health and nutrition – in addition to standard demographic profiling questions.

• The survey was undertaken by a third party MRS partner and is therefore bound by the MRS code of conduct.

• The survey was carried out online during the week commencing 17th October 2011.

Methodology: quantitative survey

Source: Evolution Insights

Changes in food available to spend on food

Perceptions on discount retailers

Awareness and use of price comparison and voucher code websites

Multi-buy appeal in different categories and finding the tipping point

Understanding pricing and promotions

Promotion appeal

Price-related drivers for shopping – in store and online

Loyalty

Main supermarket information

Demographic profiling

Topics of questions in quantitative survey


Contact us

Evolution Insights Ltd

Prospect House32 Sovereign Street

LeedsLS1 4BJ

Telephone: 0113 336 6035

e-mail: [email protected]

Web: http://www.evolution-insights.com

Company No. 07006001Country of Incorporation: United Kingdom