THE concern expressed by many suppliers at New Zealand being the world’s promotion capital with a major level of promotional price pointing has been recognised by Progressive and changes in its strategy are being implemented.
The retailer has admitted, like its competitor, that there is an obsession with pricing in this country but has significantly reduced its former promotional pricing activity by introducing its EDLP strategy of LockDown and PriceDown.
In fact in the past 12 months, Countdown promotional sales have dropped dramatically from 62% of total sales to just 52% with a commitment to drop it further.
For the suppliers, this seems like good news, and is, but the savings in that quarter are probably being counteracted by the other downpricing activities in the Countdown armoury. In general, the Countdown strategies are working and although it has been tough for the mothership in Australia, things have been much better on this side of the Tasman.
Last year, Nielsen research showed that 56.9% of all grocery sales in New Zealand were sold on promotion with Australia not far behind on 42% but there were much lower figures elsewhere such as the United States (36.7%) and the UK (33.4%). In Europe there is a high level of hard discounters and a much lower percentage of sales on promotion whereas in New Zealand, the industry is without a sub-channel of hard discounters.