UK supermarkets ramped up their promotions in January 2023, extending value ranges, launching price locks and launching other cost-based incentives designed to keep shoppers spending throughout what can usually be a quiet month.
Morrisons started the trend, investing £16m in reducing prices across 50% of its Savers range on 3 January.
“We want to do all we can to help when it comes to the cost of grocery shopping,” said Morrisons chief executive, David Potts at the time, adding that customers will see a “noticeable impact on their budgets at a time when they really need it.”
The other supermarkets quickly followed suit, Waitrose with the Great Savings Event and Tesco trying the extended price lock on over 1,000 products.
They were then followed by, Sainsbury’s who added more lines to its Aldi Price Match campaign, with Iceland then extending its £1 price freeze across hundreds of frozen products.
“As we start the New Year, we know times are tough for many of our customers right now,” said Tesco UK chief executive, Jason Tarry, adding that the retailer’s move will help customers budget “when they need it most.”
Do these new year promotions and price freezes make a difference? Or could traditional supermarkets – which are some of the largest businesses in the UK – be doing more to compete with Aldi and Lidl as they look to help shoppers save money this January?
A RECORD Christmas
It was a bumper Christmas for the UK supermarkets but reports show, a political backlash could be brewing as consumers battle to keep the cost of their weekly shop down amid record-breaking inflation levels.
Spending on groceries across the UK reached a record-breaking £12.8 billion in December. However, Kantar’s recent update made it clear that driving factor behind this was grocery price inflation, rather than consumers choosing to buy more.
Both Tesco and Sainsbury’s admitted that despite posting strong sales growth (and full year profit expectations of £690m and £2.4bn respectively), volumes were down compared to last year.
Shoppers might have been buying ‘Christmas treats and fizz’, but they were also looking for deals, spreading the cost of their shop and keeping an eye on their budgets.
January sales: fact or fiction?
UK partner at IPLC, Paul Stainton, has said the pricing incentives being launched as we enter 2023 are nothing more than straightforward new year deals that “happen every single January.”
Stainton mentions that shoppers are usually “in crisis” and tend to shop around more in the new year, having overspent at Christmas, adding that “nothing is really happening in January other than Veganuary – that’s why you tend to find all that’s talked about is price, price, price.”
“You always see, from week one, new price campaigns which are trying to keep customers who have been shopping at the various supermarkets. But the message in January has to be to save money.”
“As soon as one starts, the others try to follow,” he continues, describing Tesco’s decision to introduce a price lock rather than price cut strategy as “interesting”.
He adds that “Sainsbury’s and Asda have both had price locks and they will continue to do so. There will be lots of price lock campaigns while we are still seeing rising costs – and that won’t go away for the next few months.”
While Stainton believes these campaigns are set to continue, retail expert and director at The Retail Mind Ged Futter says that in reality, they have little to no effect on consumers.
He describes them as ‘optics’, adding that they “sound good but actually to the vast majority of customers, don’t mean anything. If you reduce the price by 10%, that might be a penny. While it sounds high, the actual cash amount that customers are saving isn’t a lot.”
This article first appeared on Grocery Gazette
