the role of loyalty, price & promotion 2012 sample extract

www.evolution-insights.com SAMPLE SLIDE

The Role of Loyalty, Price and Promotions – The Shopper’s Perspective 1 SAMPLE EXTRACT

Evolution Insights Ltd Prospect House

32 Sovereign Street Leeds

LS1 4BJ Tel: 0113 389 1038

http://www.evolution-insights.com

• Evolution offer a range of products & services for clients in the field of shopper research:-

• Off-the-shelf research

– Evolution’s off the shelf research publications deliver affordable insight into shopper motivation and behaviours in UK food, drink and grocery

• Insight Plus

– Insight Plus offers your business the opportunity to engage in any of our regular shopper research projects in advance of publication, tailoring the scope to suit your needs

• Bespoke Consulting

– As publishers of research, we are able to draw upon a wealth of existing proprietary data for consulting projects – helping to better inform and shape any further research requirements.

Evolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespoke research for manufacturers, retailers and agencies.

Further information is available at our website http://www.evolution-insights.com

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About Evolution Insights

As a leading publisher of shopper research, we are ideally placed to offer your business actionable shopper insight.

Our research and analysis helps clients develop targeted shopper marketing initiatives designed to influence shoppers at the point of purchase.

We use a range of research methodologies to discover genuine insights. Our research incorporates a broad spectrum of robust qualitative and quantitative research techniques.


Contents


Key findings and executive summary 6

The scope of the report 7

Key findings and executive summary 8

Key findings and executive summary (2) 9




Inflation and food retailer price war 13

Introduction 14

Price wars 15

Food price inflation 16

Food price inflation (2) 17

Summary 18 Changing shopping habits and different types of promotions 19

Introduction 20

Changing shopping habits in recession 21

Changing shopping habits in recession (2) 22

Savings through trading down 23

Price comparison 24

Recession 25

Money available to spend on food in the last 12 months 26

Definition of value – what shoppers want 27

Value – relationship between price and value 28

Frequently promoted categories 29

Number of promotions at different retailers 30

Proportion of branded products of all promotions at different retailers

31

Average % saving on branded products on promotion 32

Average % saving on own-label products on promotion 33

Websites offering vouchers and discount codes 34

Voucher code websites 35

Price comparison sites 36

Why promote – benefits of promotional activity for manufacturers and retailers

37

Summary 38

Loyalty in the food and groceries market 39

Introduction 40

Loyalty cards currently carried around by the shoppers 41

Loyalty cards and discount vouchers currently carried around by the shoppers

42

Defining loyalty 43

Loyalty cards 44

Loyalty schemes 45

Tesco Clubcard 46

Nectar card 47

Boots Advantage card 48

Superdrug Beautycard 49

Coffee shop loyalty cards 50

Other loyalty card schemes 51

Summary 52

Loyalty and price related drivers for shopping 53

Introduction 54

Price-related drivers of store choice - in store and online 55

Drivers for favouring shoppers’ most used supermarket – in store

56

Drivers for favouring shoppers’ most used supermarket – online 57

Summary 58

Different types of promotions 59

Introduction 60

Appeal of different types of promotions – in store and online 61

The online grocery shopper: at a glance – drivers of online grocery shopping

62

Online vs. offline deals 63

Offer appeal – in store and online 64

The most attractive in store promotions by social group – in store

65

The most attractive in store promotions by household type in store

66

Life stage and attractiveness of different promotions – in store 67

Contents


The most attractive in store promotions by social group – online 68

The most attractive in store promotions by household type online

69

Life stage and attractiveness of different promotions – online 70

Summary 71

Understanding promotions 72

Introduction 73

Figuring out complicated offers 74

Lowest price per unit – washing powder 75

Lowest price per weight – yoghurt 76

Lowest price per item – soft drink 77

Percentage discounts 78

Summary 79

Single item vs. multi-buys – finding the tipping point 80

Introduction 81

Tipping point for different categories 82

Finding the tipping point for bulk-deals – when is it worth it to get two instead of one?

83

There is a loaf of bread available for two for £2 or one for the price below.

84

There’s a box of your favourite washing powder (850g, 10 washes) available for two for £5.50 or one for the price below.

85

A pack of your normal toilet rolls (18 rolls) is available for two for £12 or one for the price below.

86

Tipping point for different product categories 87

Summary 88

Price expectations in convenience stores 89

Introduction 90

Convenience store prices 91

Convenience store prices – perceptions by age group 92

Convenience store prices – perceptions by social group 93

Convenience store prices – perceptions by life stage 94

Summary 95

Deal appeal – determinants of choice 96

Introduction 97

Proxy categories for survey questions 98

Deal appeal 99

Deal appeal – a 4 pint bottle of milk 100

Deal appeal – a 4 pint bottle of milk (2) 101

Deal appeal – a box of washing powder (850g, 10 washes) 102

Deal appeal – a box of washing powder (850g, 10 washes) (2) 103

Deal appeal – instant coffee 104

Deal appeal – yoghurt 105

Deal appeal – beer 106

Deal appeal – beer (2) 107

Summary 108

Multi-buy deals and online grocery shopping 109

Introduction 110

Willingness to buy in bulk in store and online 111

Willingness to buy in bulk in store and online (2) 112

Willingness to buy in bulk in store and online 113

Bulk-buying online 114

Summary 115

Different retailers’ current promotional strategies 116

Introduction 117

Promotions leaving shoppers confused 118

The cost of promotions 119

Retailer price strategies in 2011 120

Asda’s strategy on promotions and pricing 121

Shoppers mostly shopping in Asda 122

Tesco’s strategy on promotions and pricing 123

Shoppers mostly shopping at Tesco 124

Sainsbury’s strategy on promotions and pricing 125

Shoppers mostly shopping in Sainsbury’s 126

Morrisons strategy on promotions and pricing 127

Shoppers mostly shopping in Morrisons 128

Waitrose’s strategy on promotions and pricing 129

Contents


Shopper perceptions on prices and promotions at different retailers

130

Cheapest retailer in relation to primary store of choice 131

Best deals in relation to primary store of choice 132

Price matching 133

Everyday low pricing vs. promotions 134

Discount retailers 135

Effectiveness of pricing strategies and campaigns – Christmas performance in 2011

136

Methodology 137

Methodology 138 Methodology: quantitative survey 139 Glossary 140

The economic downturn and food price inflation are challenging household budgets and shoppers need to find ways to cope with the squeeze. This report investigates how shoppers feel about food prices, what kind of promotion types they prefer. We also tested the tipping point for ‘2 For’ offers using a number of proxy categories to demonstrate differences. A complete section of the report is dedicated to testing whether shoppers understand promotions and how they deal with confusing or difficult offers. We also look into the effects on store loyalty when food retailers are at constant war on prices, and what are the price-related drivers of store choice.

The report also provides a good overview of the current promotional strategies adopted by the big four retailers and existing loyalty schemes offered by the fast moving consumer goods retailers.

The understanding of this vital area of shopper understanding places us in a good position to undertake bespoke research at an individual category level.

The scope of the report


The economic downturn has resulted in inflation and

higher taxation which is also affecting food prices.

The cost of food has increased by approximately 5.0%

in the last 12 months. The British Retail Consortium

has however estimated that about 40% of groceries

are bought on promotion. When promotional pricing

is factored in, the cost of food has increased by only

3% in the last 12 months. According to The Grocer

price Index the cost of food was up by 5% compared

to a year ago and by 4% when promotions were

considered. There is some variation between

different retailers. Whereas Asda shoppers are only

paying 2% more than a year ago, prices in Tesco have

gone up by 8%. Promotional activity and discounting

isn’t showing any signs of slowing down though and

promotions appeal to all age and social groups.

Retailers are in constant competition to be the

cheapest. Asda has, however, changed its strategy

and is gradually shifting away from promotions to

everyday low prices. How long the other retailers can

keep going remains to be seen but it is possible that

the impact of promotions is smaller in the future.

The extent of inflation on food prices varies between different retailers and is dependant on promotional activity.

Food price inflation

3.4 3.7 3.3 3.2

3.1 3.1

3.0 3.1 3.2

3.7 4.0 4.3

4.1 4.5 4.5

4.2 4.4

4.5

5.2

5.0 4.8

2.0 2.8 1.8

1.9

3.3

4.1

5.1 4.5

5.5

6.1 6.3 6.3

4.6 4.4

5.8

6.9

6.2 6.2

6.4

5.0

4.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Mar

-10

Ap

r-1

0

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan

-11

Feb

-11

Mar

-11

Ap

r-1

1

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Per

cen

tage

ch

ange

on

yea

r ea

rlie

r

CPI (overall index) Food and non-alcoholic beverages


• Majority of shoppers claim to pay more attention to prices than 12 months ago. It seems though that what shoppers say and what they do is different. In reality shopping in convenience stores is on the rise even though shoppers admit convenience stores are more expensive than supermarkets.

• Lots of little shops instead of a big weekly shop expose shoppers more to impulse buying which can increase the food bill.

• There is also a growing trend towards meal for tonight deals at different retailers. Shoppers aren’t planning their shops which is an expensive way of shopping.

Price comparison


31.9

14.9 14.1

26.5

3.0 2.5

7.0

0

5

10

15

20

25

30

35

Stronglyagree

Agree Agreesomewhat

Undecided Disagreesomewhat

Disagree Stronglydisagree

% p

rim

ary

gro

cery

sh

op

per

s

60.9% agree

The majority of shoppers (60.9%) are more price conscious compared to 12 months ago.

I’m spending more time looking at prices in store compared to 12 months ago

Groupon is known by nearly 75% of shoppers whereas the most of the other voucher code websites are unfamiliar to most grocery shoppers. Moneysavingexpert.com is the most used, with 9.5% using it often and 17.5% using it occasionally.

Voucher code websites


83.3

81.5

80.7

75

73.1

71.5

60.4

42.4

39.5

25.6

10.1

13.3

14.2

13.2

16.2

21.3

26.1

30.6

28.3

44.3

2.6

2.9

2.2

2.9

3.8

2.7

4.8

7.1

5.2

8.2

3.6

2

2.4

5.8

5.8

4.1

6.8

16.4

17.5

17.5

0.5

0.4

0.6

3.1

1.1

0.4

1.9

3.5

9.5

4.4

Vouchercloud.com

Wow-coupons.co.uk

Mysavings.com

Hotukdeals.com

Livingsocial.com

Wowcher.co.uk

Kgbdeals.co.uk

Myvouchercodes.co.uk

Moneysavingexpert.com

Groupon.co.uk

0 10 20 30 40 50 60 70 80 90 100

% primary grocery shoppers

Not aware Aware but haven't tried it

Aware, have tried but don't use anymore Aware and use occasionally

Aware and use often

Are you aware of the following types of voucher code websites, and if so, have you used them?

Loyalty cards currently carried around by the shoppers


So what’s in your purse/wallet?

There is no real belief that prices are better online than in store. This is interesting because outside the category of food and groceries online prices are absolutely considered cheaper.

Online vs. offline deals


51.6% undecided

20.7% agree

27.7% disagree

Online offers are better than offers in stores

Why aren’t online offers better? For other shopping you can get good bargains

online!

I would shop online more often if the offers were better than in stores.

0

10

20

30

40

50

60

70

80

90

100

25 30 35 40 45 50 55 60 65 70 75

18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 and over

£

%

If your shopping came to a total of £50 in your normal supermarket, how much would you expect to pay for the same items in a convenience store?

• Younger respondents (18 to 24) were more

likely to expect convenience prices be lower

than in a supermarket.

• The oldest group expected lower prices than

the younger groups, apart from the youngest

age group.

• The mean averages for different age groups are

• 18 to 24: £54.60 (9.2% more expensive)





• 65+: £57.84 (15.7% more expensive)

Majority of shoppers in all age groups expected convenience store to be higher than their normal supermarket prices.

Convenience store prices – perceptions by age group


28.6% of 18 to 24 year olds expected the total price to be less than £50.

• Detailed shopper insights were gained from a survey of 1,007 UK adults who say they regularly shop for food and grocery. The samples were fully representative of the UK population.

• The survey contained 28 questions relating to health and nutrition – in addition to standard demographic profiling questions.

• The survey was undertaken by a third party MRS partner and is therefore bound by the MRS code of conduct.

• The survey was carried out online during the week commencing 17th October 2011.

Methodology: quantitative survey


Source: Evolution Insights

Changes in food available to spend on food

Perceptions on discount retailers

Awareness and use of price comparison and voucher code websites

Multi-buy appeal in different categories and finding the tipping point

Understanding pricing and promotions

Promotion appeal

Price-related drivers for shopping – in store and online

Loyalty

Main supermarket information

Demographic profiling

Topics of questions in quantitative survey

Contact us

Evolution Insights Ltd

Prospect House 32 Sovereign Street

Leeds LS1 4BJ

Telephone: 0113 336 6035

e-mail: [email protected]

Web: http://www.evolution-insights.com

Company No. 07006001

Country of Incorporation: United Kingdom
