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Monday 16 December 2019

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Payments Awards 2019

Retail discounting rises in April

Written by Peter Walker
01/05/19

Shop price inflation decelerated in April to 0.4 per cent, from 0.9 per cent in March, according to the latest British Retail Consortium (BRC) and Nielsen figures.

Non-food prices were back in inflationary territory in April, when prices decreased by 0.6 per cent, compared to March, when they were flat.

Food inflation decelerated in April to 2.2 per cent, down from 2.5 per cent in March. Fresh food inflation eased to 1.5 per cent in April, down from 1.9 per cent in March. Ambient food inflation also slowed to 3.2 per cent in April, down from 3.4 per cent in March.

April saw a significant pick-up in promotional activity, according to the latest data, with the number of both food and non-food discounted product lines more than doubling, compared to both last year and last month.

The analysis observed a shift in promotional behaviour, whereby retailers are trading depth for breadth, with more lines on promotion, but shallower price cuts. The substantial increase in discounting this April is a testimony to shoppers’ reluctance to spend and to the intense competition within the industry.

The clothing and footwear category saw the highest growth in promotions, followed by DIY and fresh food.

BRC chief executive Helen Dickinson said that the slowdown in the shop price growth for both food and other goods has been driven, in part, by the significant number of promotions that have taken place in April.

“There were more than double the number of product lines on discount this month compared to the previous, as retailers hope to recover ground after March’s disappointing sales figures.

“Intense competition may be benefiting consumers, but is cutting into the already slim margins of retailers,” she continued. “In order to be successful, retailers must invest in both their physical and digital offerings to ensure they can provide the customer experience consumers want.

“However, investment comes at a cost and unless the government acts to reform the broken Business Rates system we may find more store closures and job losses on the horizon,” Dickinson added.

Mike Watkins, head of retailer and business insight at Nielsen, agreed that supermarkets continue to battle for shopper spend by offering attractive price cuts as seasonal fresh foods become available and non-food retailers, coping with weak demand, are keeping price points competitive.

“However, many households are still cautious about spending, so we anticipate promotions continuing over the summer months to help the momentum in retail sales which was kick-started by the late Easter and some warm weather.”


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