FMCG Promotions Lose Appeal In Europe

It might sound hard to believe, but recent findings suggest that promotions in the food and non-food market could be reaching a tipping point as they are no longer attractive enough to consumers. A new report from market and shopper intelligence provider IRI shows that the time for fast-moving consumer goods (FMCG) brands to reconsider their promotion strategies has probably come.

After gathering data related to sales, pricing and promotions across seven European markets, the firm established that the volume of food and non-food products sold on promotion climbed by 2.7% in 2012. Despite consumers’ sustained focus on deals, however, volume sales are starting to shrink, especially across non-food segments, as consumers are reducing spend on non-essential items. As a result, overall sales volumes slipped 0.1% in the region.

Personal care recorded the most notable increase in promotions, going up by 7%, but volume sales dipped 1%. Promotions in the household category gained 4.3%, however sales were down 1.3%. Confectionery remained the most promoted segment in Europe, accounting for 31% of all products sold on deal.

Yet promotions in certain segments continue to lure consumers, especially straightforward deals that provide real value to shoppers, such as offers related to fuel.

The “Price and Promotion in Europe” report gathered insights from the UK, France, Germany, Italy, Greece, Spain and the Netherlands. According to Tim Sales, strategic Insight Director at IRI, promotions have long assisted consumers in softening effects of the economic turmoil, but as shoppers grow accustomed to them, loyalty towards brands and stores has diminished. In order to regain trust, retailers need to think of other ways to use promotions and find new paths for growth, setting clearer goals that reflect developments in the new multi-channel environment.