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.

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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.”

Readers' comments (7)

  • A battle of wills between the consumer and the retailer...who will win?

    It cheers me up to see a retailer bleating about the cost of promotions and that they are "forced" down the route of promotions themselves! Consumers value the offers available with vouchers and coupons: the retailer who can use and harness them correctly will come out on top but I do sense that coupons have now become part of the shopping psyche and it will prove very difficult to wean consumers off them!

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  • I can't help but think that Morrison are trailing behind other retailers and supermarkets here? Most of their competitors have been producing tailored, targeted vouchers based upon consumer purchasing habits for years, Okay, perhaps not generating those vouchers immediately from the till, but the principle is the same.

    The problem is that with so many loyalty and voucher schemes, customer don't want to carry around a purse/wallet full of paper vouchers and loyalty cards, and considering the advances in digital services, I think Morrison's announcement seems dated. How about some NFC strategies using mobiles devices or smart cards that will make it easier and quicker to find money saving offers in store and take advantage of them?

    Sam

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  • Further to Samantha's point, both Asda and Somerfield used this exact system back in 1998 so I think it's fair to say that Morrison's are trailing behind badly.

    All retailers using coupon at till technology now (Tesco, Sainsbury's, Co-op, Boots etc)are linking it to loyalty card data and using it far more intelligently.

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  • Can't believe that supermarkets don't make money from money off coupons. They must have to live off margin scraps in that case...don't think that is quite the case!

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  • Vouchers and promotions have been overused by some retailers. In todays market the price is not only the reason why shoppers buy. If they buy a lowest price product that disappoints on quality, service or other expectation that "saving" on price is more that wiped out. Retailers end up with an unhappy customer who thinks that they have wasted money.

    It's our role as marketers to help shoppers make the best buying decision. While price is a factor we need to give customers other reasons to buy. It's not such as easy option but more interesting for marketers and much more profitable than giving away margin.

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  • The current industry debate around coupons detailed in the article about Morrison’s focus on targeted coupons only exists because of their continuing and growing popularity among consumers.

    Spending coupons and vouchers is now firmly embedded in the consumer mindset and their shopping behaviour is predominantly driven by this.

    The latest consumer research from Valassis shows consumer loyalty to grocery retailers appears to be challenged with 30% of consumers shopping away from their main supermarket because other retailers are advertising better offers.

    The challenge now is for brands to balance their promotional activity to take into account the current high level of uptake among consumers and think creatively about how they are incorporated into brand positioning.

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  • I rarely use vouchers given at the till. I find the short date, nit picking small print and items out of stock until past the voucher date so irritating I refuse to play that game.

    Give me genuine on shelf offers as traditionally favoured by Morrisons anyday. So take note Morrisons, do what you have always done best, and stick with it.

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