Fruit and Veg Promotions down -18.4% as retailers face supply disruptions.

Fruit & Vegetable promotions are down as supply chain issues and flooding disrupts retailer confidence. Will this change as supply returns?

In a volatile March 22 quarter, total retail fruit & veg promotions were down 18.4% across  on the previous year as supply chain challenges affected retailers. Vegetable categories were more greatly affected, with 2505 adverts, a sizable 24.5% reduction across Australian retail. Reduced promotional activity was also recorded for fruit, with 2268 total promotions, 12.3% less than 2021.

In a quarter plagued by bare displays due to disruptions to supply and availability on multiple fronts, retailers were more hesitant to engage in promotional activity.

Particularly during January and February, the Omicron and BA-2 subvariant strains wreaked havoc across the community, with many forced into isolation as cases peaked. This affected supply chains from the farm to the shelf, with a significant number of retailer store and DC staff, long with up to half of truck drivers reported absent due to COVID.

Flooding events from Gympie to Gippsland across the East Coast also affected product supply, particularly for vegetable products grown in more heavily affected areas of southern Queensland and northern NSW.

From the end of the March quarter, there have been signs of returning retailer confidence in fruit & veg promotions activity. From week 14-20 2022, adverts were down 8.1% on the same period in 2021, with fruit adverts up 9.6%. Additionally, while vegetable adverts are still down 19.4%, recovery is expected this quarter as suppliers move to unaffected crops in the coming weeks.

Prior to Early 2022’s supply chain disruptions, retailers had broadly moved to a strategy of price matching promotional activity of competing stores. This has largely had the effect of negating the price advantage delivered for individual retailers of running these adverts.

With an increasing number of adverts over the last 5 years, and consistent price levels across retailers due to advert price matching, it’s also possible that diminished relative customer discount is attenuating sales volume increases. This could be problematic for retailers and suppliers with product volumes now back on the rise.

With a return of supply and promotional activity, will recent retailer strategies reduce the effectiveness of adverts to increase sales volume?

Follow weekly fresh food retail promotions across categories for all state markets with Freshlogic’s Adwatch service here.

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