Promotions sent packing

The Australian grocery sector saved $1 billion in promotional spend in 2018 – one of the biggest turnarounds in the past decade.

In the past, says Nielsen Connect Pacific Managing Director Bernie Hughes, the percentage of products sold on promotion in Australia has been on an upward trajectory. In 2017, this resulted in $11.2 billion being wasted on reducing prices unnecessarily.

Last year the amount wasted on price promotion dropped to $10.1 billion.

Impacts of low percentage of sales on promotion

  • Innovation: more money is invested in research and development for new products and store concepts.
  • Prices: less price competition equals higher prices for shoppers
  • Shopper benefit: more access to a variety of shopping experiences that offer products to meet a range of consumer needs
  • Risk for the sector: increases the risk of a new entrant causing disruption.
  • Supply chain: capabilities to forecast baseline volume and produce items accordingly.

A spare $1.1bn

The $1.1 billion is the equivalent to opening more than 30 new supermarkets across Australia, says Mr Hughes.

Rather than putting this much money into promotions, it is possible for companies to aim their finances towards research, development and marketing efforts to address local consumer needs. For retailers, the savings could be reinvested into visioning, scoping, launching and improving brick and mortar and e-commerce store formats that will improve the overall shopping experience.

Similar Articles



Most Popular

Industries most impacted by COVID-19

In mid-March over 60% of Australian businesses report being affected by the COVID-19 coronavirus. This is up from a massive 45% points from a month...

Spotlight on Australia’s supermarkets and grocery industry

By Jessica Mudditt. IBISWorld’s ‘Supermarkets and Grocery Stores in Australia’ report describes Australia’s supermarket and grocery industry as “fiercely competitive” and highly concentrated. ALDI’s rapid...

The bakery behind ALDI’s own brand

As ALDI expands into new Australian markets, the retailer is forging new partnerships with suppliers that can meet the high standards of its exclusive...