Unbrielievable Cheese Pricing

Throughout this year, several prominent grocery retailers have changed their promotional strategy, adopting loyalty card schemes that offer customers discounted prices or money back in return for their details and 'hopefully' loyalty.

Recent reports have found that promotional purchases are at a two-year high, with 23% of UK Supermarket promotional sales driven by loyalty scheme discounts. Sainsbury's introduced their 'Nectar' card promotion in April, and Morrisons are the latest to follow Tesco and the Coop.

Our online pricing data focused on a selection of processed cheese products across the major Grocery Mults, over an eight-week period. Comparing Tesco, Asda, Sainsburys and Morrisons, Mini Babybel offers an insight into the varying degrees of promotional activity.

With their established Clubcard model, Tesco kept their pricing consistent throughout, although they weren't always the cheapest. Morrisons held a reduced price for seven of the eight weeks, reverting to the standard price for the third week. Asda and Sainsbury's prices were more active, flipping between the reduced price and normal price several times during the eight weeks.

In the build-up to Sainsbury's Nectar card launch, we examined the typical promotional pricing structure of Tesco and Sainsbury's, during February and March this year.

Our study of five processed cheese products in Sainsbury's and Tesco highlights the variance in pricing and promotional tactics. The price differential between the two retailers never exceeded 50p, except for Mini Babybel. Interestingly, Sainsbury's prices frequently shifted due to promotional activities, whereas Tesco's pricing remained consistent and, in some cases, unchanging for the entire eight weeks.

Tesco's longer-term price reductions will save on operational costs and aim to keep consumers loyal to the brands/products on promotion.

Tesco promotions were mainly "Clubcard" and "Aldi Price Match" but were only periodically applied to one or two products. In contrast, Sainsbury's always had at least one of the five products on promotion for every week of the eight-week capture period.

With 39% of the population enjoying cheese regularly and the current food inflation rate seeing up to 80% price increases on cheddar alone, will retailers continue to add promotions to these products, or will the loyalty card promotions stagnate the price strategy?

We'll also see in due course whether the new Sainsbury's and Morrisons loyalty card schemes mirror Tesco with consistent pricing instead of traditional fluctuations in the price designed to create impulse purchases.

If you'd like to learn more about how ESA Retail can keep you ahead of the competition when it comes to pricing and promotions, get in touch via https://www.esa-retail.co.uk/contact-esa-retail-insights/