Whilst recently commenting on the Household Care sector, Procter and Gamble boss, Irwin Lee, said that damage is being caused to the sector thanks to a trend of increasing promotions, deepening depth of cut and low innovation.
Brand View has looked into a number of Spring Clean categories to see what promotional trends are in effect. The products included in this Insight go beyond day-to-day cleaning products and include Carpet Cleaning Solutions, Furniture Care, Cleaning, Metal Polish and Bleach categories with a focus on the ‘big 4’ supermarkets.
In support of Lee’s thoughts, there is a clear trend of increasing number of SKUs on promotion across Procter and Gamble, Reckitt Benckiser and Unilever from the beginning of 2010 to the end of 2013. Over the past four years these manufacturers have seen a 47 per cent increase in the number of SKUs on promotion.
Looking closer at the depth of cut in this category, we can see that whilst on the surface the depth of cut does appear to be increasing; this is in reality a direct result of an increase in base price. The percentage depth of cut sees a marginal decrease over the four year period.
Some of this increase in base price can be attributed to new product development and innovation. Since early 2012, 42 per cent of newly developed products and brand extensions have been released in the last six months alone. Of these products 40 per cent were from Procter and Gamble, 38 per cent from Reckitt Benckiser and 21 per cent from Unilever.
However, despite this trend of increasing promotional activity across the manufacturers, the promoted price (which includes the equivalent single price on a multibuy promotional mechanic) has seen a 4 per cent increase over the four years.*
Given its position, it could be expected that ASDA consistently has the lowest promoted price of the big 4 supermarkets. However, no single retailer has a dramatically lower promoted price which could be seen to be lowering the value category as a whole.
In fact, despite a large dip in price in 2011, Tesco has been increasing the value of the category and has seen a considerable rise in promoted price from £2.18 to £2.45. Overall the supermarkets have seen a 7 per cent increase in the promoted price, moving from an average promoted price of £2.14 to £2.28.
Whilst both the base price and promoted price of the category are increasing, there is a clear indication that the gap between base price and promoted price is widening, moving from £0.09 in 2010 to £0.28 in 2013.
Overall the promoted price is going up and the value of the category is strong, however this is being achieved through a higher base price.
* This graph excludes the product Vanish Easy Clean High Traffic Carpet Cleaning Kit as this retails at £25.00 and accentuates the price increase seen for Reckitt Benckiser.