Woolworths survey of shoppers shows cost-of-living crisis getting worse

Woolworths says households are struggling to make ends meet as shoppers fill up with cheaper grade petrol and cut back on groceries to stretch their money.

Woolworths’ survey of its shoppers has revealed a worsening cost-of-living crisis as households struggle to make ends meet. Picture: David Clark

The Reserve Bank’s interest rate cut has failed to arrest Australia’s cost-of-living crisis for young families and singles, according to internal Woolworths research, which found that frugal behaviour such as downgrading the standard of petrol is becoming normal.

The survey of Woolworths shoppers indicates grocery bills ranked above mortgage and rent payments and utilities bills in terms of financial difficulty, with almost one in two households describing themselves as struggling to make ends meet.

The analysis categorises families, young and middle-aged singles and couples under the acronym STMEM for “struggle to make ends meet”.

Shoppers are increasingly anxious about food. In its customer focus groups, the largest supermarket heard from people exclusively eating packed lunches at work and filling up their car with a cheaper grade of unleaded petrol, 91 instead of 98, to save money.

The cost of living crisis caused by high inflation has been the top concern of Australians since May 2022, according to Woolworths’ briefing notes, trumping housing, health, crime and the economy.

Woolworths research has shown cost-of-living concerns rising among younger families as they stress over grocery bills.

Both Woolworths and the nation’s second-largest supermarket chain, Coles, are scrambling to cater to this growing group of stretched households through promotions and discounts, cheaper private label groceries, loyalty schemes and value pack sizing to remain relevant and affordable.

The latest Woolworths research, shared with some grocery suppliers in a closed-door meeting and obtained by The Australian, paints a dour picture of the average consumer as being on edge, stressed and anxious about covering their weekly budget.

It is one of the major issues shaping the upcoming federal ­election.

The confidential survey in January revealed 73 per cent of respondents defined as ‘‘families’’ identify living expenses as their biggest concern, ahead of housing (53 per cent), health (31 per cent), crime (27 per cent) and the economy (16 per cent).

This was more pronounced for younger customers – couples and singles – with 76 per cent of this cohort rating cost of living the leading concern ahead of housing (57 per cent), health (20 per cent), crime (22 per cent) and the economy (16 per cent).

The STMEM designation covers almost half of all families – 47 per cent – who agonise over how to make their wage last until the end of the week.

Among younger and middle-aged singles and couples, 45 per cent said they were struggling, which is worse than the 40 per cent of older singles and 25 per cent of retirees that identify the same way.

“I don’t know how good it is for the car, but it’s saving me more,” one Melbourne woman told Woolworths, speaking of her cheaper petrol strategy.

“I am always looking for a bargain … I will look online to see where the best price is,” another customer responded.

The rise in cross-shopping is one of the newer behavioural changes to emerge, as shoppers visit a few supermarkets and other retailers to complete their shopping list at the cheapest possible price. The level of cross-shopping was above 80 per cent for families and around 70 per cent for younger singles and couples.

Top value-seeking behaviours according to the Woolworths ­survey were buying products on special or promotion (41 per cent), cutting back on groceries (34 per cent), writing and sticking to a shopping list (33 per cent), cutting back on treats (32 per cent) and buying more private label groceries (27 per cent). Many of these are likely never to return to pre-crisis levels, even if cost of living pressures reduce.

Coles boss Leah Weckert at The Australian’s Global Food Forum last week. Picture: Luis Enrique Ascui

The Reserve Bank cut the cash rate from a decade-high 4.35 per cent in February to 4.1 per cent as it gained confidence that inflation would revert to its 2 to 3 per cent target band.

The nation’s supermarket chains are at the forefront of household pain.

The Australian Competition & Consumer Commission has given the federal government its final report into supermarkets after completing an inquiry examining their relationships with suppliers and member-only price schemes. Its findings are yet to be made public.

Coles chief executive Leah Weckert told The Australian’s Global Food Forum last week that household stress relating to living expenses was still high.

“Our latest survey in January showed still two-thirds of customers were feeling very stressed in their household budget and that is a very significant number, and the biggest contributors to that are mortgages, fuel, electricity prices but also groceries.” Woolworths chief executive Amanda Bardwell has said she has witnessed a step-up in consumers seeking value.

“That customer behaviour has shifted quite in an accelerated way over the last six months,” she said.

“We’ve been talking for 12 and 18 months about the impact of inflation, we’ve understood customers are under pressure in terms of cost-of-living pressure, but it really wasn’t until mid-calendar 2024 that we started to see a real ­acceleration in value-seeking ­behaviour.

“We started to see more and more customers looking for specials, more customers opting into own brand and more customers opting to cross-shop across a number of different retailers,” she said.

What we’re seeing, and what we saw accelerate, is customers seeking value, comparing prices, and therefore choosing to cross-shop at a greater rate than we’ve seen previously.”

Originally published as Woolworths survey of shoppers shows cost-of-living crisis getting worse