Grocery sector saved $1.1bn by axing unnecessary promotions

The Australian grocery sector has cut costs by more than A$1.1 billion due to the reduction of unnecessary price promotions.

Research giant Nielsen’s revealed that in 2017 A$11.2 billion was lost on unnecessary discounts.

Last year marked a major turnaround in the FMCG sector with the “percentage of sales on promotion dropping to 38% and the amount wasted on price promotion down to $10.1 billion”.

“While it may be hard to believe, not all Australians want everyday low prices. Shoppers want the ability to choose value and premium products depending on the category, the occasion, and the experience. Two of the major ways that both manufacturers and retailers can work together to beat back promotional wastage in 2019 is through effective pricing and new product development,” Bernie Hughes, Pacific managing director, Nielsen Connect said in a Nielsen article.

In 2018, 38 per cent of products lifted their average price per unit and 14 per cent increased their price per unit and also delivered unit growth.

Hughes said effective price management and new product development are still key strategies for industry growth.

“Consumers pay a price premium for products that are ‘good for me’ and ‘good for we’ – being healthy for the consumer and healthy for the environment,” she added.

Hughes said that the money saved could be invested in further research, development and marketing to meet shoppers’ needs, instead of putting out new products that doesn’t resonate with locals.

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