Blog: Promotional intensity reaches "record levels"
Petah Marian | 10 January 2011
Promotional intensity in UK retail looks to be showing no signs of abating, with Morrisons CEO Dalton Philips saying today that promotional intensity reached record levels over the Christmas period.
In the retailer's Christmas earnings call, he said that promotional intensity reached 40%, up from Sainsbury's CEO Justin King's estimation of around 36% in November.
Philips said that despite all the "headlines around inflationary pressures", customers in his stores got a "great deal" over Christmas.
When asked if the continued competitive environment was going to have an impact on margins, he said that the retailer is "taking a hard line with suppliers", but that because the retailer manufactures so many of its own products it has a "very clear idea of what's happening with pricing".
He said competitive pressure has "stepped up since the beginning of the year" and that it came out with a "really aggressive price crunch" that is largely offsetting VAT increases, with the customer benefiting from some "very sharp pricing".
The promotional intensity, he said, is likely to remain high as consumer confidence in their personal financial situation is negative and with further Government cuts planned, is only likely to worsen.
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