A recent report found that the number of grocery product promotions is on the rise. Recent surveys have found that shoppers want more deals, and that retailers and suppliers expect they’ll be offering more of them.
So why do so many brands seem to be holding back?
According to a number of consumer product companies, their competitors are the ones offering more promotions, while their own products are worth paying a premium for. But their customers may have the final say.
“The promotional landscape is getting noisier, with the overall volume of promotions doubling in recent years,” the market research company Numerator noted recently. And for good reason, as shoppers are becoming increasingly stressed. “In times of rising prices or economic uncertainty, consumers become increasingly reliant on promotions to save money,” Numerator continued. So “it’s important to invest in promotions to protect your business as well as strategies that potentially grow your business,” it advised brands.
But some brands are resisting.
Shoppers are “looking for value,” seeking out “smaller packs and promotions or larger pack sizes,” Procter & Gamble’s Chief Financial Officer Andre Schulten told investors last week. So how does the world’s largest consumer packaged goods company respond to its customers’ desire for deals and the increasing amount of promotions out there? “The easy answer would be to react to strong promotions we’re seeing in the market with equal promotion response,” Schulten said. But “we don’t think that’s a winning strategy… so you will not see us go there.”
Instead, “you will see us continue to innovate,” Schulten said, as P&G proceeds with its strategy of producing superior products that shoppers are willing to pay for.
P&G competitor Kimberly-Clark has a similar outlook. “We view promotion as a tactical lever to drive trial of great innovation,” CEO Michael Hsu told his company’s investors. “Promotion does not expand our categories.” He emphasized that Kimberly-Clark is offering fewer promotions than its competitors, and fewer than it used to, before the Covid pandemic.
To numerous investor questions about promotions, the CEO of Arm & Hammer maker Church & Dwight insisted his company is also holding the line on deals. “I would say promotion for us is consistent with the last three or four quarters, maybe even four or five quarters,” CEO Richard Dierker said. “Our depth of promotion has not changed at all.” When one investor pressed him on whether Church & Dwight’s promotional response is adequate, pointing out that “your key competitors are suggesting that things are ramping,” Dierker shot him down. “Look, you guys can ask all about promotions,” he said. “I kind of gave you the answer.”
Even TreeHouse Foods, a company you may never have heard of, is swatting down talk of increased promotions. The company, which produces snacks and drinks for retailers to market as their own store-brand products, says it’s not feeling pressured by promotions. “You have probably heard plenty of commentary about promotions from others in our industry,” TreeHouse CEO Steven Oakland told investors last week. But “within our categories, the current level of promotion remains well below the levels seen prior to the pandemic.”
So how can promotion levels be up, if no one seems to be offering them? The big brands that seem to be publicly resisting, may find themselves in the minority. A recent survey from FMI – The Food Industry Association found that half of all retailers and suppliers agreed that “the industry will sell more on promotions/offer more sales promotions” in the year ahead. Two-thirds of grocery wholesalers believed the same. And a separate FMI survey found that loyal shoppers “want stores to further encourage that loyalty through additional promotional incentives.”
“When budgets are tight, shoppers put more effort into seeking out savings, browsing retailer ads or even forgoing purchases when there’s no promotion available,” Numerator noted. “In today’s economic climate — marked by tariffs, inflation, shifting consumer spending habits, and ongoing supply chain pressures — promotions are more than just a tactic to drive sales; they’re a strategic necessity.”
A new survey from the Associated Press-NORC Center for Public Affairs Research found that 53% of Americans say the current cost of groceries is a major source of stress in their life – even more than housing and health care costs.
“The trajectory here could be that we’ve reached the low point and the consumer gains confidence,” P&G’s Schulten said optimistically. “Even though the consumer slows down for a period of time, they don’t stop doing their laundry. They don’t stop washing their hair. They don’t stop using diapers… So overall, I feel good.”
It’s a good thing he does. His company’s performance – and that of others resisting coupons, promotions and deep discounts – could depend on whether deal-seeking shoppers feel the same.
Image source: Lorie Shaull 
