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Sainsbury's axes two-for-one offers amid consumer spending concerns Sainsbury's axes two-for-one offers amid consumer spending concerns
(about 5 hours later)
Sainsbury’s is to scrap multi-buy promotions, after a survey found that 76% of supermarket shoppers regularly spend more than they intend to due to special offers including buy-one-get-one-free (bogof) deals. Sainsbury’s has become the first of the major supermarkets to commit to phasing out controversial multi-buy deals in favour of lower everyday prices after mounting evidence that shoppers find them confusing and misleading.
The grocer plans to phase out multi-buy promotions across its grocery business by August.
Sainsbury’s said its customers had already responded positively after it removed more than half of multi-buy promotions on its grocery products. The company said on Thursday that from March it will scrap multi-buys from both branded and own-brand soft drinks, confectionery, biscuits and crisps.
The announcement followed the publication of a survey by a government-backed body, which found that supermarket shoppers seduced by bogof deals and other special offers end up paying more than £1,000 more a year on average than planned.
The Money Advice Service (MAS) found that 76% of people regularly spend more than they meant to.
On average, according to the MAS, people said they spend £11.14 more than they intended to per shop. As the average shopper visits the supermarket more than twice (2.2 times) a week, the Service calculated that this could lead someone to spend about £1,274 per year more than intended.
Related: Can you spot the best supermarket deal? Take the quiz below to find outRelated: Can you spot the best supermarket deal? Take the quiz below to find out
MAS also asked more than 2,000 consumers to select the cheapest options when presented with four sets of offers as they might be found in a supermarket. Just one in 50 (2%) people selected the best-value option from all four sets of offers. Three quarters (74%) of people answered at least one question correctly. Britain’s second largest supermarket is to end the vast majority of so-called “buy one, get one free” (bogof) and other deals on hundreds of products by August because customers have found they waste food and drink after being encouraged to buy more than they need.
Hunger, boredom and children’s “pester power” were also common reasons people gave for piling more into their trolley than they had intended. “Customer shopping habits have changed significantly in recent years, with people shopping more frequently, often seeking to buy what they need at that moment,” said Sainsbury’s food commercial director Paul Mills-Hicks. “Our customers have told us that multi-buy promotions don’t meet their shopping needs today, are often confusing and create challenges at home in terms of storage and waste.”
Six in 10 (59%) people said shopping on an empty stomach makes them spend more. In this scenario, women were more likely to stock up on chocolate, sweets and pastries, while hungry men were more susceptible to buying meat and alcohol. The announcement comes as the government’s competition watchdog prepares to issue a new pricing rulebook to retailers by Easter, designed to ensure shoppers are not misled. It also follows the publication of a survey this week revealing that supermarket shoppers seduced by bogof deals and other special offers pay at least £1,000 more a year on average than they planned.
One in three (31%) people spend more when they are bored in the supermarket, while one in four (26%) said pressure from children makes them stuff their trolley with extra purchases. The government-backed Money Advice Service found that 76% of people regularly spent more than they intended to with an average overspend of £11.14 per shopping trip. As the average shopper visits the supermarket 2.2 times a week, this adds up to £1,274 per year more.
The research also found that people who made a shopping list, and stuck to it, typically spent £200 a year less than those who rarely or never made a list. After years of complex promotions, reward and loyalty cards and ill-fated price matching schemes that have failed to arrest tumbling profits, the move by Sainsbury’s could mark a decisive shift in Britain’s hard-fought supermarket price war.
Those who stuck to a shopping list spent £6,374 per year on average in the supermarket - £217 less than the £6,591 typically spent a year by those who do not bother making a list. Other retailers are also simplifying their pricing, bringing them closer in line with the German discounters Aldi and Lidl, which have used limited product ranges, quality and simple low prices to lure customers away from their mainstream rivals.
The MAS is an independent body set up by the government to offer money tips. Earlier this month, Morrisons said it was slashing the price of more than 1,000 popular products in an attempt to stop shoppers deserting to Aldi and Lidl.
John Penberthy-Smith, customer director for the MAS, said: “The problem is that quite often we see a special offer at the supermarket and we don’t want to miss out - so we throw it into our trolley without really thinking about whether it is a good deal or whether we actually need it. Lidl said: “Our unique business model means that we are able to offer our customers the lowest possible prices without compromising on the quality of our products.”
“Often deals can be difficult to understand and compare with other prices. Then there’s waste - even if the offers are cheaper, bigger packets or 50% extra are not always good value for money if we end up chucking most of it away. Aldi said: “In our view, complicated promotions, multibuy offers and price matching schemes are confusing, are not transparent and do not serve the best interests of consumers. We focus on providing quality products at transparent everyday low prices that consumers can easily understand.”
“The best thing to do if you want to save cash is to write a shopping list and try to stick to it. You can also try shopping when you’ve just eaten and you’re not tired.” The UK’s largest retailer, Tesco, said it was not phasing out multi-buy promotions but had cut the prices on more than 1,000 products and kept prices more stable over the past year.
Sainsbury’s has responded to the supermarket price wars by promising less promotions and price cuts instead. “We have been reducing the number of short-term promotions to focus on transparent, simple, consistently low prices on everyday products that matter most to customers, including on fresh meat, fish, fruit, and vegetables,” Tesco said. It also axed many half-price promotions in the wine aisle, promising instead to simply keep prices low.
Related: Sainsbury’s drops Tesco from Brand Match price comparison Asda has long promoted its “everyday low prices” with chief executive Andy Clarke warning against the “panic’” promotional tactics of the chain’s rivals. Asda said: “We have always prioritised low prices over promotions, but we also understand that it’s about getting the right balance for customers. This week alone, we’ve removed 133 multi-buys in favour of everyday low prices and we have never used bogofs.”
Sainsbury’s food commercial director Paul Mills-Hicks said: “Customer shopping habits have changed significantly in recent years, with people shopping more frequently – often seeking to buy what they need at that moment in time.” Sainsbury’s said its customers had responded positively after it removed more than half the multi-buy promotions on its grocery products. From March, it will scrap multi-buys from all soft and fizzy drinks, confectionery, biscuits and crisps.
He said that by replacing multi-buy promotions with lower regular prices, “we are making it easier for customers to buy the products they need, in the quantities they need, without having to buy multiple items to enjoy great value. Since we started simplifying our pricing approach we’ve seen a much greater variety of products in our customers’ baskets, signalling that they like the flexibility to make their own choices.” Supermarket pricing tactics have been under scrutiny by the government’s competition watchdog in response to a “super-complaint” lodged by the consumer group Which? last April. It submitted a dossier setting out details of “dodgy multi-buys, shrinking products and baffling sales offers”, claiming retailers were creating the illusion of savings, with 40% of groceries sold on promotion.
The Competitions and Markets Authority said it was not contemplating banning supermarket bogof deals and special offers. Following a three-month inquiry, a report from the Competition and Markets Authority last July warned of “poor practice that could confuse or mislead shoppers”. It is finalising its new binding guidelines to ensure price cuts and deals are presented in a way that does not mislead shoppers.
In response to a complaint from the consumer group Which? in April 2015, it was “currently working with businesses to ensure that supermarkets’ promotional practices can be clearly understood by shoppers and are not misleading. The CMA expects to provide further details of its engagement with retailers in the next few weeks.” The authority will not ban multi-buy promotions and deals, but will commit retailers to the new rules.
MAS survey results Sainsbury’s said “the vast majority” of its multi-buy promotions would be phased out across the grocery business in-store and online by August 2016, with a few exceptions where multi-buy promotions will be used at certain times of the year.
Here are the percentages of shoppers who say they spend more due to certain circumstances, and the average amount extra they say they spend on a shop because of these circumstances: Jane Ellison, the public health minister, said: “We need to make the healthy choice the easy choice and it is good to see a leading supermarket like Sainsbury’s responding as customers become more health-conscious. As part of our childhood obesity strategy we will be looking at more ways in which we can support people to live healthier lives.”
• Special offers, 76%, £11.14
• Hunger, 59%, £10.87
• Not having a clear idea or plan of what they want to buy beforehand, 49%, £13.44
• End of aisle displays, 45%, £11.91
• Boredom, 31%, £14.53
• Children/pester power, 26%, £15.50
• Till displays, 23%, £16.28
• Tiredness, 22%, £13.94