Morrisons to focus on targeted promotions
Morrisons is to focus its promotional activity on targeted coupons based on shoppers’ purchases, as CEO Dalton Philips slams the “nuts” level of vouchering and coupons in the UK.
The supermarket is rolling out a vouchering system that gives shoppers targeted coupons at the till based on items in their basket, in a bid to offer customers “more relevant and useful” promotions, after a trial.
The initiative, operated by voucher firm Catalina, is similar to Sainsbury’s at-till coupon scheme. It is not known if it will replace Morrisons more generic voucher promotions such as its Christmas Saver Card that offers money off coupons in return for a certain number of weekly shops in the run up to Christmas.
Philips’ disdain is levelled at “indiscriminate” coupons and vouchers that offer generic money off shopping. It’s understood that supermarkets make no money at all from promotions such as “spend £40 get a £5 off voucher” despite their proliferation in recent months.
The deals are used, however, to drive footfall, which is essential in the current economic climate. Morrisons, Tesco and Asda have all run similar offers in recent months.
Speaking at Morrisons’ half year results presentation last week, Philips said that it was working to find “innovative ways to provide real value” such as its coupons at till scheme in the face of “ever tightening” budgets.
He said: “We recognise the vouchering that’s going on in the market and we dip in and dip out. Sometimes it [vouchering] doesn’t make sense … vouchering has been nuts in my opinion so we spent a lot of time ducking and diving and doing what we do best. [Vouchers at till] is a smart way of driving up value.”
He is the second CEO of a major UK supermarket to register his dislike of their rise over the past year, echoing comments made by Tesco CEO Philip Clarke in June.
Clark called the high level of vouchers and coupons “unhelpful” adding that while it appealed to consumers dealing with ever tightening household budgets, it was not a long term solution to improving performance.
Consumers facing the rising cost of living and low consumer confidence are demanding more coupons and vouchers to ease pressure on household budgets and often only buy on promotion in certain categories. The grocers have edged into a vicious cycle where they sacrifice margin on promotional items that has to be made up on full price items, which are then priced higher.
Supermarkets want a return to a less promotional environment based on every day low prices where the difference between a full price and a promotional price is less stark but the overall cost of a weekly shop remains the same.
Brand owners share supermarkets’ concern that such as high-level of promotional activity damages the perception of a brand. Giles Jepson, chief marketing officer at Heinz, says the company is looking to innovation to drive brand value amid growing concerns that coupons and discount vouchers are damaging sales.
He adds: “We have to focus on developing great propositions and fantastic products that people are willing to buy because the rest of it is out of our control.”