The Grocer recently wrote on the continuing use of promotions by the big grocery retailers and suggested that execution varied greatly. Their article entitled “Waitrose shines amid promotional shambles” rated Waitrose as the most professional on implementation and Asda the worst of the top 5.  Our view at Retail-Remedy is somewhat different.  As customers are becoming increasingly promiscuous, no longer is the nearest supermarket the obvious choice with press and TV advertising enticing people into bargains and creating a nation of cherry pickers. Safeway’s demise was in part due to their insistence in a high low retail pricing strategy that meant busy action alley Wednesdays each week, with the rest of the store a museum.

Getting off the drug of promotions should be led by those with a sincere EDLP (Every Day Low Price) retail strategy, but the truth is the likes of Asda (and to a lesser degree Tesco) have abandoned their EDLP stance to stop Morrisons and JS becoming the exciting places to shop.  Reducing cost and easing operation through EDLP retail strategies may make great sense but it is not sexy to suppliers or customers.  Asda’s price perception is ahead of the pack and looking at its action alley it communicates value the clearest, although it does suffer at times from inconsistent retail standards and end displays that are mixed in their individual sku value and with inevitable trading floor changes this position is likely to continue.

When Retail-Remedy reviewed the promotional execution of the big 4, our observations were that if Morrisons could communicate their deals as powerfully as Asda, both on ends and down the aisles they would improve sales and price perception. They might have execution right, but it is executing mixed messages on price and deals that can be confusing to customers. Our instinct is that Richard Hodgson will bring improved promotional communication to Morrisons. We believe that the improved communication methods we expect to be implemented at Morrisons will reward those suppliers who can deliver a full end offer that hangs together on product relationship and deal type.

It looks like the promotional battle will intensify rather than recede. Where does this leave EDLP retail strategies?  On the back-burner until a brave retailer can break the cycle of promotional promiscuity, the Asda Price Challenge was such an attempt but their promotional strategy has not abated suggesting a half hearted effort.