Superdrug hails ‘strong’ promotions as it grows sales by double digits

Superdrug grew its profits 43.6% in 2023, as it invested in exclusive discounting for loyalty card members and its own brand range.

Source: Superdrug via Ashfield Health

Superdrug has highlighted its “strong” promotional offering, singling out the impact of its exclusive discounts for loyalty members as it grew sales by 12% last year.

The retailer began offering exclusive discounts for members of its loyalty scheme in late 2022. Other retailers including Boots, and supermarkets like Tesco, Lidl and Sainsbury’s also use the mechanism.

Writing in its results for the 52 weeks ended 30 December 2023, Superdrug said that the promotional offering means the retailer is well placed to deliver “competitive prices” to attract consumers. Sales reached £1.53bn in 2023, up 11.8% versus 2022.

As well as acting to enhance its price proposition, Superdrug states the introduction of member pricing has helped grow its Health & Beauty card loyalty scheme. In turn, the loyalty scheme acts to drive the frequency of visits and increase customer retention, it claimed.

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Speaking to Marketing Week last November, Superdrug marketing, ecommerce and customer director Matt Walburn indicated the company would continue to grow the exclusive discount scheme.

“There’s been a big move to members-only pricing,” he said. “Every week we have more and more of our offers as member-only and that will continue all the way through 2024. But we wanted to do something to get on the front foot and shake things up a bit.”

At the same time, it also introduced VIP Rewards, designed to work in tandem with the existing discount scheme and give Superdrug’s most valuable customers an increasing series of rewards.

Despite its use of promotions, which can sometimes serve to undermine margins, Superdrug increased its profits significantly in 2023. Profit before tax was £111.6m, up 43.6% versus 2022.

Own-brand sales were also highlighted as a pillar of Superdrug’s value offering.

“An increasingly diverse own-brand proposition has also enabled Superdrug to bolster its appeal among price-conscious consumers, with this range performing particularly well during Christmas trading (up 10%),” says Tash Van Boxel, retail analyst at GlobalData.

With 2023 finally being a year where Covid was not a major factor, a return to in-person retail was also crucial for Superdrug’s growth in the year, however “offline plus online” remains a strategic focus.

Last year was the company’s first full year of its marketplace proposition, which allows third-party sellers to showcase their products to consumers through Superdrug’s website.

This also enables Superdrug to trial brands’ popularity before adding them to its permanent proposition, says GlobalData’s Van Boxel. She also urges the retailer not to take its eye off its online presence.

“Given that the online channel is forecast to outpace offline spending in the health and beauty sector in the coming years, Superdrug must use its physical stores to bolster online performance,” she says.

“It should highlight its click and collect service, which allows consumers to pick up items within 30 minutes from their chosen store if the item is in stock, which rival Boots cannot compete with.”