Promotions are disappearing from grocery shelves, especially for national brand products that consumers are accustomed to buying at a discount. CNN tries to answer the question on when promotions will return in this article with its interviews with CPG companies.
Danielle Wiener-Bronner also interviewed multiple analysts to shed light on the retail discounting process and why national brand items are the most affected. Though some CPG companies are set to return to normal promotional practices, others like Conagra are holding off on their discounts to retailers.
“We are likely to see less discounting” in the future, said Conagra (CAG) CEO Sean Connolly during a recent call with analysts discussing the company’s financial results for the quarter ended May 31. He added that this could push prices items sell for at grocery stores slightly higher in the near-term. Conagra sells brands like Orville Redenbacher’s popcorn, Birds Eye frozen vegetables, and Duncan Hines cake mixes.CNN Business July 2020, ” It’s harder to find sale items at the grocery store”
Wiener-Bronner goes on to explain that competition between retailers often leads to stores passing CPG discounts on to the consumer. In the absence of deals from higher up in the supply chain, consumers face a new promotional landscape where, according to CNN, “Americans will just have to do without those two-for-one specials.”
In the past few months, keeping product on shelves has taken priority over discounts for drawing in customers to stores, as shown by trends in Engage3’s Out-of-Stock report covering heightened demand during the pandemic. Additionally, in returning to promotions, retailers also run the risk of harming their margin unnecessarily.
“Sometimes the person who bought that product would have bought it anyway, so you just cannibalized your market by giving them a discount,” Edris Bemanian, CEO of Engage3, a firm that uses data science to help grocery stores with pricing.CNN Business July 2020, ” It’s harder to find sale items at the grocery store”
Lack of promotions, combined with wavering consumer loyalty to brands in the grocery aisle, may be enough to drive private label sales even higher; the Private Label Manufacturers Association recently reported double-digit sales growth in Q1 2020. Engage3’s analysis offers hope for the future, though, fueled by competition between longstanding retail rivals: “The deals will likely come back, Bemanian said, once grocery stores have to fight for their customers again.”
The full article is available on CNN Business’ site here. For more information about the effects of the pandemic on out-of-stock and pricing trends, you can read our report on the subject here. To learn more about the hidden price war occurring between retailers, you can find out more in our feature here.