Suppliers’ and retailers’ views on the promotion tool have been split too. Retailers’ use of promotions came under scrutiny from the UK’s Competition Commission (CC) which examined the impact of multi-buy offers on suppliers as part of its Groceries Inquiry last year. A CC spokesperson told FoodNavigator.com that as a result of its findings, the code of practice is due to be tightened in February 2010 in order to better protect suppliers from having to bear the brunt of cut-price and giveaway promotions.
Nonetheless, buy one get one free offers, or BOGOFs, remain the most popular promotional tool used by retailers. Although shoppers surveyed by IGD said that advertising on television and in magazines is most likely to persuade them to try a new product, at 29 per cent of respondents, 23 per cent said the same of BOGOFs. This was followed by price reductions, at 17 per cent, and three-for-two offers, at 15 per cent.
Chief executive of IGD Joanne Denney-Finch said: "Shoppers are changing their behaviour by shopping around more, taking more time and looking out for the best deals. They are clearly swayed by in-store promotions, but the most effective way to encourage new product trial is to use a combination of advertising, merchandising and promotions.”
Wastage worries
However, attitudes toward giveaway promotions vary, and consumers have become more concerned about how much food waste these offers create. In August, Defra (The Department for Environment, Food and Rural Affairs) suggested that retailers should offer half-price deals on food that is near its sell-by date, rather than BOGOFs, as part of tough targets on reducing food waste.
IGD’s survey respondents were similarly concerned. More than a quarter (26 per cent) of shoppers said they want to see an end to multi-buys on fresh food and 28 per cent said they are concerned about food waste created by promotions.
"Multi-buys remain extremely popular but a growing concern about food waste is influencing shoppers and so retailers are becoming more selective, increasingly targeting these promotions at long-life and non-food items."
As these offers continue to be popular with retailers, suppliers are expected to welcome the CC’s new code of practice, which will prohibit retrospective changes to terms and conditions, and limit the extent to which suppliers are required to pay for promotions, listings, inaccurate forecasts or customer complaints.
It will also set out a clear procedure for resolving disputes and the requirement for retailers to provide reasonable notice and commercial justification before a supplier is de-listed.