In the first half of this year, there were generally 15% fewer promotions in stores than a year ago. The largest decline, close to 80%, was recorded by stores selling children's products. Large declines were also seen in electronics and home appliance chains – over 40%, as well as hypermarkets – almost 30%. Smaller reductions were made by drugstores and pharmacies, cash&carry, supermarkets, and convenience stores. Increases below 10% occurred only in discounters, DIY chains, and wholesalers. Only stores in the culture and entertainment category maintained last year's level. These conclusions come from a report by the AdRetail Group Analysis Center, Hiper-Com Poland, and UCE RESEARCH.

From an analysis of over 2.3 million promotions, it appears that in the first half of this year retail chains overall ran 15% fewer promotions in their leaflets than in the same period of 2019. As Andrzej Wojciechowicz comments, in the fourth quarter of last year chains may have agreed with manufacturers on a promotional plan similar to or even richer than the year before. However, they had to limit the number of campaigns due to the pandemic, lockdown, and the shift of a significant portion of sales to e-commerce.

There Are Far Fewer Promotions in Stores Than a Year Ago [REPORT] — illustration 1
– Taking into account all the challenges that no one in the industry expected a year ago, an overall reduction of 15% seems substantial. However, to assess it unequivocally, one should look separately at the situation of each sales channel. What is undeniable, though, is that the lockdown played a large part in this – emphasizes Karol Kamiński, Chairman of the Chapter of the AdRetail Inspirio Program.

Which categories suffered the most?

The largest declines were recorded by children's product stores – 79%, as well as chains offering electronics and home appliances – 43%. Third place went to hypermarkets – 27%. Then came drugstores and pharmacies – 14%, cash&carry – 8%, supermarkets – 7%, and convenience chains – 6%.

– The decline in promotions in children's stores resulted from the fact that Poles shifted their purchases to discounters. Their offers are just as attractive as those of specialty chains. Consumers can buy products for children while doing their everyday shopping, reducing the number of places they visit. During a pandemic, this is of significant importance – explains Dr. Urszula Kłosiewicz-Górecka.

Why did hypermarkets lose out?

Consumers mainly focused on buying essential products, as another expert, Dr. Maria Andrzej Faliński, emphasizes. The reduction in purchases in categories such as toys or electronics and home appliances resulted in narrower promotions. Costly campaigns could do little in this situation, so they were abandoned. The position of hypermarkets, which offer a very wide assortment, also declined because customers were not interested in it.

– The difficult situation of hypermarkets had been visible for some time. The pandemic only sharpened it. During the pandemic, customers drastically limited visits to large-format stores. They were simply afraid of virus infection. They preferred to go to smaller outlets – recalls Karol Kamiński.

Who benefited from the pandemic?

How did the pandemic affect promotions in stores?

In turn, the largest increase was recorded by discounters – 9%, followed by DIY stores – 5%, and wholesalers – 3%. In stores in the culture and entertainment category, nothing changed. Meanwhile, Yves Frerot of Hiper-Com Poland notes that during the national quarantine, stores relatively close to the consumer gained a clear advantage. In this case, discounters led the way. However, we heard a lot about home renovations due to the situation. And that could have influenced the results of chains in the DIY industry.

– It is worth noting that only 3 out of 11 formats ran more promotions. A 9% increase for discounters, while most were in decline, is a worrying phenomenon for the industry. Discount stores are strongly pushing all broadly understood competition out of the market. Therefore, retail chains should draw the right conclusions from this analysis. Due to the uncertain market situation, consumers increasingly expect discounts, as public opinion research already confirms. And that is why chains should meet these expectations – argues the Chairman of the Chapter of the AdRetail Inspirio Program.

Experts forecast

As Dr. Faliński predicts, if another lockdown occurs – which is likely – the restriction of supply and trading activity will extinguish promotional campaigns. There will be no demand for articles other than essential ones. Only some formats will earn, mainly discounters and discount stores themselves. The promotional message will be very narrow and emphasize low prices only for essential products. If, however, the above situation does not occur, promotions will explode, because trade and production will want to rebuild the market quickly.

The analysis was commissioned by the AdRetail Inspirio Program. It was prepared by experts from the AdRetail Group Analysis Center, the international research and analytical agency Hiper-Com Poland, and the analytical and research platform UCE RESEARCH. Ultimately, over 2.3 million promotions from leaflets published throughout the first half of 2020 were examined. The results were compared with data from the same period last year. Discounters, hypermarkets, supermarkets, convenience chains, cash&carry, wholesalers, drugstores and pharmacies, DIY chains, electronics and home appliance stores, as well as children's stores and stores in the culture and entertainment category were taken into account.

 

Summary

According to the report prepared by the AdRetail Group Analysis Center, Hiper-Com Poland, and UCE RESEARCH, in the first half of 2020 retail chains reduced the number of promotions by an average of 15% compared with the same period in 2019. The largest declines affected children's product stores and electronics and home appliance stores, while discounters and DIY chains recorded increases. Experts indicate that the pandemic and lockdown forced chains to limit advertising campaigns. An interesting point is that only three of the eleven analyzed formats increased the number of promotions, and the growth of discounters may be a signal for strategic changes across the entire retail industry.