Promotional sales soar in Europe but UK focuses on EDLP, Nielsen reports

The share of consumer packaged goods (CPG) sold on promotion in Europe reached its highest level so far in 2020, at 18.2% in the four weeks ending 4th October. This represents the highest value in 2020 and the second highest value in the last 52 weeks, second only to the week preceding Christmas in 2019, reveals new data from Nielsen Intelligence Analytics business unit.

 4 W 03/11/19 4 W 01/12/19 4 W 29/12/19 4 W 26/01/20 4 W 23/02/20 4 W 22/03/20 4 W 19/04/20 4 W 17/05/20 4 W 14/06/20 4 W 12/07/20 4 W 09/08/20 4 W 06/09/20 4 W 04/10/20
Europe average promotional sales level %17.3 17.619.817.8 17.3 16.0 13.6 14.0 17.0 17.6 16.8 17.4 18.2

However, the average share of promotional sales is still much lower across the board in 2020 when compared to 2019.

CountryAverage promotional sales level % in 52 weeks to 4th October 2020Average promotional sales level % in same period 2019

In the UK, every fifth FMCG product is sold with a discount (22%) this year, according to Nielsen data. This represents a sales value of £25.5 billion and recovers from a low of 16% in April 2020. But unlike many countries in Europe where the share of promoted sales has been rising, the share of promoted sales in the UK is seeing a downward trend within recent weeks. In the 12 weeks ending 3rd October, Nielsen has seen a decrease of CPG promoted sales share from 25.5% to 21.3%. The downward trend can be in a big part attributed to a number of the ‘big four’ retailers, including Tesco, switching from promotion to an ‘everyday-low prices’ strategy which influenced the overall promotional levels in the UK.

The most heavily promoted categories in the UK (by share of promotional sales value) are as follows:

●        Health care (35.7%, +2.4 p.p.)

●        Pet care (30.6%, -4 p.p.)

●        Fresh and chilled food (29.9%, -5.6 p.p.)

●        Toiletries (24.7%, -2 p.p.)

●        Household and cleaning products (21.6%, -4 p.p.) 

Anne Haine, head of intelligent analytics business unit in Europe, Nielsen, said: “FMCG promotions reached very low levels in the second quarter of 2020, as essential goods were flying off the shelves. But eight months into our new reality, the situation has levelled off. As retailers can fulfil demand and consumers feel the pinch of a difficult financial year, even a small discount may appeal to shoppers who are less confident in their financial prospects.

“In the last 52 weeks, the value of CPG sold on promotion across Europe added up to over €90 billion — which is €1.5 billion more than a year ago even as overall promotional share has fallen. This reflects bigger baskets and spend in supermarkets as restaurants have been restricted or shut. We can expect promotional sales to continue to grow across Europe as the upcoming Black Friday and Cyber Monday events approach and consumers look for discounts in every purchase area. Shoppers want to save money, reduce the cost of gift buying and even escape from reality and find a substitute for missing out-of-home experiences.”

“In the UK, as retailers compete for shopper spend, many are reducing prices across the board to encourage customer purchases, in a shift away from promotion that nevertheless highlights the huge appetite for lower prices from consumers hoping to cut costs wherever possible.” 

According to Nielsen’s data, British consumers remain one of the most lucrative groups of shoppers in Western Europe, with the effectiveness of promotions among the highest in Europe. On average, a 10% discount can bring British retailers up to a 30% sales volume uplift across various food categories. When it comes to premium alcohol, for example, whiskey — those returns can be even higher, yielding almost 50% increase of sales volume for a 10% discount.