UK supermarkets increase advertising in downturn as opportunities present themselves

Posted by Daniel Palmer on 26th November 2008

While the credit crunch has negatively impacted the advertising and marketing budgets of many companies it appears UK supermarkets have viewed the downturn as an opportunity to gain market share and boost sales.

Research carried out by Nielsen Media Research for UK newspaper The Daily Telegraph has discovered that most of the market leaders had upped their ad spend this year.

In the UK the major supermarkets have come under pressure from discount supermarkets Aldi and Lidl, who have appealed to those shoppers keen to save money as the economy deteriorates. As such many have been spruiking their value credentials with promotions such as “Feed your family for £5”. The promotions began in earnest following the sharp rise in many food prices earlier in the year and have continued as the majors seek to counter the threat of the discounters and the discounters endeavour to capitalise on the momentum they have built over the course of the year.

Research suggesting consumers are eating at home more often has also been a prompt for their ad spend rises. A number of market research firms have indicated that consumers are opting to eat at home in preference to dining out as they tighten their belts. This has offered supermarkets with the chance to capitalise on the so-called ‘trade down’ in consumer spending and promote simple dinnertime solutions that promise to be simple and cost efficient. Supermarkets have also been looking to push their private label products, understanding that previous recessions have enabled the market share of private label to get a boost.

The four ‘majors’ in the UK – Tesco, Sainsbury’s, Morrison’s and Asda – all increased their ad spend by over 15% in the six months to September 30. Asda led the way with a 52% rise, Sainsbury’s ad spend increased 21.3%, Tesco’s 18.8% and Morrison’s 15.2%.

Global consumer goods giant Unilever remained in top spot on the list of advertisers, however, sticking with their plan to invest in their brands during the downturn to ensure they remain at the forefront of consumers minds. They recorded a 4.7% increase in ad spend, according to the research.

“We believe that, in periods of severe commodity-cost-driven price inflation, relating marketing spend to turnover places too much emphasis on pricing and not enough on volume,” James Allison, Unilever Head of Investor Relations, advised last month. “The fact is that we have continued to invest in brand equity at a time when others have taken a more cautious approach.”