Are Australians Really Getting Value From Their Promotions?

Are Australians Really Getting Value From Their Promotions?

Australian manufacturers and retailers are investing an exceptional amount of time and money executing promotions on a regular basis – with the hope that both parties will benefit from a maximum return on their investment. The reality is, however, that this outcome is rarely ever achieved.

In Australia, $51 billion is spent on promoted sales; however, 48% of this amount would have happened anyway. In other words, there are grocery items that would sell the same amount whether they were promoted or not. As a result, there is an $11.3 billion opportunity (considering the discounted amount) for Australian manufacturers and retailers to drive efficiency in their promotions.

It’s estimated that the retail sales value of the discounts applied for promotions that generate little to no incremental sales is over $11.3 billion.

In the past eight years, the percentage of products sold on promotion has increased from 30% to 40%, making Australia one of the most highly promoted countries in the world. This has given rise to Australian shoppers who are highly price aware. Some of these shoppers change their behaviours by picking where to shop, switching between promoted brands in-store and pantry stocking on promoted products.


To further understand how players in the Australian FMCG industry can secure their share of the $11.3 billion promotional saving opportunity, Nielsen analysed the amount manufacturers and retailers spend on discounts across 7,000 items and across 22 categories. By looking at how sensitive shoppers are to shelf-price changes and promoted-price changes, products were split out into four distinct pricing strategies:

1. Fewer but deeper discount strategy (Hi-Lo): These products are more sensitive to promoted-price than they are to shelf-price. At a category level, chocolate fits into this strategy due to the high concentration of items compared to the market.

2. Highly sensitive to price: Products in this quadrant are sensitive to both shelf and promoted-prices and tend to be categories like pet food, pasta and deodorants.

3. EDLP or Everyday Low Price: With the high levels of price promotions training consumers to look for promos in-store, it’s no surprise that few categories have higher concentration in this quadrant. Examples include laundry and ice cream products.

4. Limit the number of promotions (Hi-No): This strategy works best for products with low sensitivity to both regular and promoted price changes e.g. canned vegetables, bread, and coffee. This is the quadrant where a significant amount of discounts are often ‘given away’.

In fact, 59% of the most highly-promoted items do not react to discounts because they fit to either EDLP or to Hi-No strategies. Limiting the promotions or changing the strategy could be more effective for these products. 


In the competitive world of retail pricing and promotions, relentlessly promoting products with no regard for sales uplift is a difficult strategy to sustain. What’s clear is that demand-driven price and promotional strategies are more likely to be sustainable in the long term.


What if you could optimise your price and promotion tactics, anytime you want?  With Everyday Pricing Analytics, you can quickly view current price dynamics and pressures across all of your products and competitive set and simulate the impact of changes for specific banners and channels.

Everyday Pricing Analytics is a syndicated, web-based always-on solution which can help you make smarter decisions every day with scale. If you are interested in a demo or further explanation of the tool, please contact your Nielsen representative.