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UK supermarkets spend hundreds of millions on promotions as grocery price war intensifies

Britain’s biggest supermarkets are pumping hundreds of millions of pounds into promotional deals as competition in the grocery sector heats up amid ongoing cost of living pressures.

Almost 30 per cent of supermarket spending was on special offers and discounts in the four weeks to 20 April, according to figures from market research group Kantar. The surge in promotional activity equates to £347 million spent on price cuts, many linked to loyalty card schemes.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocers have been offering big price cuts to stay competitive. They’ve invested in price cuts which were the main driver of promotional growth.” At Tesco and Sainsbury’s, nearly 20 per cent of items sold are part of a price match scheme, featuring in almost two-thirds of customer baskets.

The aggressive push on discounts comes as supermarkets grapple with thin profit margins and intensifying competition. Last month, Asda warned of significantly lower profits this year as it pledged to invest more heavily in lower prices—a move that triggered a £4 billion slump in the combined market value of listed rivals Tesco, Sainsbury’s and Marks & Spencer.

Asda has since cut prices on 1,500 products, including popular items like Cathedral City cheddar cheese and Head & Shoulders shampoo. Since January, Asda said it had slashed prices across nearly 10,000 products. Yet despite these efforts, Asda was the only major supermarket to see a decline in sales over the past three months compared with the same period last year.

While promotional activity is increasing, grocery price inflation remains a challenge for shoppers. Inflation rose to 3.8 per cent in the four weeks to 20 April, its highest level in over a year and well above the recent low of 1.4 per cent in October 2024.

The Easter period helped boost overall spending, with supermarket sales up 11 per cent compared with last year’s Easter run-up, despite a 17.4 per cent jump in chocolate confectionery prices. McKevitt noted that chocolate egg volumes still rose slightly by 0.4 per cent year-on-year, and sunny weather also led to a 31 per cent surge in burger sales as shoppers fired up their barbecues.

In terms of market share, Tesco remains the UK’s largest supermarket with 27.8 per cent, followed by Sainsbury’s at 15.3 per cent and Asda at 12.3 per cent. Aldi holds fourth place with an 11 per cent share, having overtaken Morrisons in 2022. Ocado continues to be the fastest-growing grocer, with sales up 11.8 per cent over the past year, although its overall share remains modest at 1.9 per cent.

With inflation still pressuring household budgets and competition intensifying, supermarkets are likely to keep up the battle for shoppers’ loyalty well into the rest of the year.

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UK supermarkets spend hundreds of millions on promotions as grocery price war intensifies

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