The analysis of over one million promotions showed that there was an 8.8% increase in store promotions in the first half of this year compared to the previous year. Among the eight monitored formats, four recorded increases and four decreases. Discount stores and convenience store chains both showed the largest increases with a 24.2% year-on-year growth. Supermarkets greatly surpassed hypermarkets. On the other hand, consumer electronics and household appliance stores, DIY chains, drugstores and pharmacies, and cash&carry experienced a decrease. The authors of the report note that the overall market jump from January to March was only 1.5% year-on-year. A surge in retailer activity in the second quarter is linked to the abolition of VAT on food. They also estimate that the price war among discount stores may have contributed to a 4-5% increase in the number of promotions.
The cyclical report by UCE RESEARCH, Hiper-Com Poland, and the BLIX Group shows that throughout the first half of 2024, retail chains conducted 8.8% more promotions in stores than during the same period of the previous year. “Although inflation was falling, prices remained high, forcing retail chains to run more frequent promotions to attract customers looking for bargains. Also, the price war among retail chains resulted in an increase in the number of promotions as a strategy to sustain and enhance market share. I estimate it may have increased the number of discounts by 4-5%,” explains Dr. Krzysztof Łuczak, co-author of the analysis from the BLIX Group.
Referring to previous results, it can be seen that growth in the first quarter of this year was only 1.5% year-on-year. According to Julita Pryzmont, co-author of the analysis from Hiper-Com Poland, the increased promotional activity in the second quarter of this year can be partially attributed to the abolishment of zero-rate VAT. Against a backdrop of tax hikes, retail chains had to intensify promotions to keep prices favorable for consumers, thereby maintaining a positive image and customer loyalty.
On the downside, half of the analyzed formats suffered. The largest year-on-year drop in the number of promotions was in electronics and household goods stores, at 31.7%. Then came DIY chains with a 29.5% decrease, and drugstores and pharmacies with a 13.3% decline, as well as the cash&carry format with a 0.6% drop.
“On the positive side, discount stores and convenience stores equally saw identical increases – both at 24.2%. This shows that the convenience channel is catching up with discount stores in terms of the number of promotions, suggesting its growing importance in the market,” highlights Julita Pryzmont.
Supermarkets and hypermarkets also saw increases of 12.7% and 3.6% respectively.
As Julita Pryzmont predicts, an increase in inflation in the second half of this year will likely prompt all segments to expand the number of promotions further to maintain competitiveness and attract customers.
Research Methodology:
The UCE RESEARCH, Hiper-Com Poland, and BLIX Group experts analyzed close to 7.2 thousand commercial leaflets containing nearly 144 thousand pages of promotions with a total area of almost 4.6 million cm2 issued in the first half of 2023 and 2024. These publications contained over one million promotions in total. The analysis took into account the eight largest formats in the retail market, i.e., all discount stores, hypermarkets, supermarkets, convenience store chains, and cash&carry, as well as drugstores and pharmacies, DIY chain stores, and electronics and household goods stores.
Source: https://ceo.com.pl/odmrozony-vat-i-wojna-cenowa-dyskontow-nakrecaja-nowy-trend-36434
