The leading deal this Christmas
15 December 2021
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Christmas is comingThe key theme of Christmas 2021 is that of inflation, which we will follow with another note, later in the week to cover the elements in play here.
However we look year on year on year at Christmas and whilst last year was strange, for COVID as much as anything else. We still saw Buy 6, Save 25% on Wines as a key deal in the market.
This alongside fuel savings are the big ‘deals’. Sainsbury’s ran with a 10p discount on each litre with a £60 spend last year, they haven’t replicated this year. Tesco and Morrisons were also in the mix with offers around fuel in recent times.
This year - fuel is at record highs and if anything, a discount here would make little sense.
The price movement in fuel was so great with the “shortages” and the various supply based issues means that it’s hard to tangibly show a discount of 10p a litre, which still equates to customers paying £1.30 a litre (minimum).
Notably The Times reported yesterday that Asda seemed less concerned with being the lowest price at the pump under new ownership too, showing where the margins can be preserved.
Discounts resonate but customers are wary.Fuel discounts always resonate, but customers are likely still making fewer journeys than before COVID, given the various changes and indeed, the “muscle memory” over things changing at short notice.
Which of course government has done, again. Scotland announced yesterday that a 3 household limit for mixing would be implemented (how do you even Police that?) and England may well follow suit with further restrictions.
No one knows with the government and that is the challenge, appreciate that it’s a difficult job, of course it is. But the reality is that the only thing that we are certain of in retail, is uncertainty.
For example - Scotland “encouraged” the return of social distancing in stores and a return to the fixed kit that allows screens to be placed around checkouts and other service points. Not ideal just before Christmas.
Some will enact the changes, others not. How do you police that? What do you do as a retailer?
For retail - food especially, but the wider sector too. The industry is one of ‘doing’ and ‘getting on with things’, which is noble and one of the (many) reasons I have an unhealthy obsession with the trade. That said, it can mean that retailers are far too forgiving of things that other sectors simply wouldn’t put up with.
Look at the groundswell for tougher sentences on people who assault shop workers in the line of duty, eventually. It has taken a huge, huge effort from the Coop (namely) to get this issue to parliament and then for action to be taken. The trade bodies? They got there, eventually. But the Coop drove the bus and fair play to them.
Why should the trade put up with abuse? It wasn’t so long back the workers were heroes, then they’re being threatened with all kinds because they have the audacity to ask people to wear a mask.
The key currency is AlcoholThe key currency for retailers this year, trying to get their sales moving is Alcohol. With the Buy 6, Save 25% deal in Wines notably popular across all major retailers this year.
Morrisons have run the deal less frequently than others however; whereas Sainsbury’s are on their 3rd consecutive week of the promotion, a far cry from their anti multibuy stance of times gone past.
Tesco have turned the deal on and off and aligned with Clubcard deals of course (which further aids their loyalty efforts), last week it was running and Asda too have been turning the deal on and off, replicating last year’s run.
It’s a good boost for customers who will merrily pile in to the deal given that Champagne and other lines are also included. Especially since customers are not behaving in a manner that aligns with the various economic warning signs (IE high fuel prices, high energy bills etc).
InflationThe inflationary pressure will be covered in later notes, but there will be some inflation being passed on via these deals. If you can increase the unit price of the Wines/Beers then the customer is paying more, even with 25% off.
Morrisons Beer deal is 3 for £18.99, as opposed to 3 for £18 and there will be lot more of these sorts of changes as we approach Christmas.
Certainly we are seeing various price rises around the market and the challenge with Christmas is that at on a shelf edge basis, big deals in ares like Party Food (multibuy everywhere) it’s hard to see what the unit price is doing.
So customers may not notice, initially, but they’ll notice in January when the deals dissipate and the prices are rising. They have to, quite simply, because there is so much cost in the chain and whilst availability has improved significantly….
The cost to deliver that has been significant too.
The one thing that inflation does deliver is a positive like for like number. It certainly won’t hurt the comparative figures to have a higher inflation number, as it means that everyone is spending more…….
But how to manage the price points and impact on customers is another matter, especially in January when the focus always turns to savings after spending and then the gas bills will start to arrive…….
From the Grocery Insight newsletter archive, first sent to subscribers on 15 December 2021. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.