Sainsbury's - More on those price cuts
29 March 2018
Later than advertised, but as the stores bed down, post Sports Relief and indeed heading towards Easter - the signage and wider paraphernalia for their price campaign has fully landed in stores.
The impact of removing night shift from many stores also impacted the campaign launch, with one store I visited displaying no signage at all and were busy sorting out the promotional ends at 1pm on the afternoon.
A huge task. Price change is always a major event in a stores' week and promotional changeover is a big event each month, added 900 price cuts (900+ cuts all in) and it's a lot of work to get through.
Especially since any label showing a lower price can not be displayed until the store closes, as it would mislead the customer as the prices update overnight for launch the next morning.
However all that aside, the campaign has landed in stores and looks 'classic Sainsbury's'. You would know it was a JS price campaign with the Red/White messaging, just shy of that '1000s of prices lowered' message.
It is interesting that after a brief flirtation with Orange/White signage and the various Food Dancing style ads, JS look like they have returned to what works for them. Red and White.
The price messaging is good, clear and stands out well around the store. The acid test for any package of cuts is how long the prices remain at the lower level. As the impact of inflation annualises, it seems easier to manage prices so there is a decent chance of these remaining at a stable level.
Prices are not cut significantly, in many cases it is 10p / 20p here and there to flatten things across a number of products and categories. Unsurprisingly fresh Produce, Dairy and Fresh Foods in general are big beneficiaries with numerous cuts here.
There are always schools of thought that point to Sainsbury's just bringing their prices down a little from their higher base, especially since most of the price cuts are on own label lines.
However that is perhaps unfair, the level of cuts are not gimmicky and do play in to the volume driving 'long game' they have in mind.
The challenge for Sainsbury's as odd as it is to say is availability... A volume driving game means that stores are selling more, for less and have to sell more to balance decreased margin with greater sales.
Availability is mainly the' in day' fill and the fact that any 'red label' indicating a promotion or price cut automatically attracts attention. More red labels means a greater spread of sales perhaps, so this campaign may help protect wider availability.
The presence for cuts is striking around the store with impactful red/white hanging signage alongside shelf edge signage pointing to price cuts.
Very bold and clear for customers, indeed a number of gaps were noted on lines that had been cut in price.
These price cuts will be very well received by customers, like all are. However retailers who embark upon price cuts / price reductions typically have their big deals also running which confuses the customer, watering down the price cut message entirely.
Waitrose (recently covered) reduced their Essential ranges in price but then had 'half price' event running at the same time, on brands. Where would you spend your money?
Whereas Sainsbury's run promotions, but nothing other than 'save' in any case. so this lower promotional participation helps the lower prices stand out, given the relatively low promotion count.
However there are a few conflicting messages still around, although it is early days for the campaign. It is worth taking a step back and considering the bigger picture for customers.
Customers can take a negative view on some 35,000 prices if they consider just one price is too high, so the clarity in the message is all important.
There have been some issues with the launch around labels that feature 'great regular price' but are in fact promotional products that will go back up to the original price. These should have been removed but some were still in place over a week later.
It's unclear then to customers whether this price, a 'great regular price' is part of the cuts or otherwise. Clearly the promotions are 'regularly priced' as Sainsbury's ditched multibuy deals some time ago now.
The ends read 'great prices' which also has '100s of prices lowered' on the flag attached to the end. Some of the prices in aisle reflect 'great regular price' too. However the Pizza didn't show a 'was' price crossed out. So were these promotional? Or a longer term reduction?
There are 'new regular prices' too in aisle, Laundry has had a number of these "EDLP" style labels added in recent months, reflecting the focus on increasing volume, taking deals away and then lowering the overall price.
However these labels alongside the 'new lower price' and 'great regular price' could confuse customers. The key message is 'lower price' and nothing else should factor in terms of wording.
Another minor surprise was the level of flags in aisle that reflected promotional prices, not lower prices.
There were some lower prices flagged quite strongly, alongside large red barkers for selected products also, however in some aisles there was an overload of price points that were promotionally priced branded lines.
Of course, there is a need to remain competitive and highlight branded price cuts on the promotional cycles. However I would have thought the prevalence and priority would be the price cuts across each aisle, repeated messages about prices dropping on own label.
Equally the doorway should have given way to a lower price message?
£7 to £4 isn't a bad price cut on Persil's latest "innovation" but own label is what will propel the business forward and crucially, one that can only be bought at Sainsbury's.
As noted, there were several mentions in category for the price cuts, exclusively so in some categories like Pet Food.
There is a balance to be had in terms of the prices that are called out though, the own label Chinese sauces is a great example of clear, effective price communication.
It is noteworthy that the promotional brand at £1 had sold out regardless next to it however....
If we consider other areas of the store, there are bigger ticket items that are higher in price. But calling these out, even with a cut can highlight prices that may be too high for some customers.
However if the saving is strong, like with Pet Food (£1 off) then it looks stronger, however it's still nearly £8 for Cat Food, own label too (Although greatly improved in terms of quality.
Large King Prawns called out at £5.70 per pack does scream (£) hugely to customers in the fixture. It's only a 25p cut too. However prices have been rising steadily in Fish so any cuts are noted by customers.
Reflecting the higher price points on larger packs in Fish particularly, it's noted that Sainsbury's were pricing Prawns per 100g on the label. not per kg.
Yet the price is strong in the market, no one appears to do a large pack online but the per kg price is certainly competitive.
The Mince at £4 is a great example of a good price cut, not a huge cut but one that is effective and rounds the pack off at £4 nicely. As a meal centre, it makes it simple for customers to understand and will be viewed as a 'real time' 25p cut as customers will look to buy this pack size anyway.
As we approach Easter, their one multibuy they do allow returns. 6 bottles 25% off is back! Tesco are also running the deal to drive footfall and sales for the busy Easter weekend.
Therefore these price cuts are well timed by Sainsbury's, ironically we will be watching availability and seeing if that holds up, especially with increased volumes going via the own label lines that have been cut in price.
It's a strong campaign and whilst some cuts are a matter of 10p/20p, there is an effective spread across the store and they impact own label (which is more attainable for customers) and also touch popular products like Mince, Yoghurts and numerous Produce lines.
The focus is correct to be on 'every day' items, rather than taking £1 off a giant tub of Vanish and dropping it to £11 for example.
As this service has touched on before, M&S will have to react given their price matching scheme with Sainsbury's (although we'll cover M&S next on those 3 big emails). Waitrose then come under pressure as Sainsbury's have dropped prices on lines such as own label Pasta, leaving Waitrose way ahead of the market.
Sainsbury's have also rolled these price cuts to Sainsbury's Local, which hasn't happened before. It does mirror Tesco who regularly run their strong 'big' deals in Express too.
All to play for in 2018 - price wars aplenty. A decent effort from Sainsbury's here, own label and enhances their "EDLP" lite movement.
Their key watchpoint are store standards and availability ironically, especially on the newly reduced products. It's the last thing I thought we'd talk about in relation to Sainsbury's.
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From the Grocery Insight newsletter archive, first sent to subscribers on 29 March 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.