Coles has slashed prices on a basket of groceries taking the price war to Woolworths, Aldi
Coles will slash prices on a basket of groceries and supercharge it with bigger FlyBuys rewards as the grocery basket war between it, Woolworths and Aldi pays off for shoppers.
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The grocery discount arms race between Woolworths, Coles and Aldi is heating up with Coles set to unveil reduced prices this week on more than 300 grocery items and supercharged loyalty rewards, as the big three chains vie for cost-conscious shoppers.
Last month, Woolworths diverted one quarter of its $400m in targeted cost savings into lowering shelf prices for 400-plus popular supermarket products as part of its ‘Lower Shelf Price’ program. That forced a response from German discounter Aldi, and now Coles has returned serve with its own promotion.
Coles begins its winter promotion with 307 groceries captured by its ‘Down Down’ discount offer for 12 weeks, yielding customers an average 19 per cent price saving. It will also introduce its first ever FlyBuys activated bonus campaign that will give loyalty customers 10 times the number of points on more than 800 shelf items during June.
Aldi has already pushed through discounts following last month’s opening pitch by Woolworths. And while Aldi can’t supplement its offer with a loyalty scheme, analysts view its promotional pricing as a de facto loyalty offering.
Some analysts believe Coles and Aldi could be sounding out Woolworths to see if it will divert any more of its estimated $300m cost-cutting war chest to fund further shelf price discounts. Woolworths, Australia’s biggest supermarket chain, is desperately seeking to reclaim its value position within the nation’s grocery hierarchy.
It could also represent a test for Woolworths chief executive Amanda Bardwell who recently promised she had “listened to customers” and that Woolworths was now acting “to do more” on lowering checkout prices.
Coles will target a range of staples and categories such as lamb, pork, sausages, cake, crackers, frozen peas, yoghurt, Kleenex tissues and stain remover.
Coles chief commercial officer Anna Croft said the savings were designed to help Australians get more out of cold weather essentials.
“This winter we’re investing in bringing prices down to deliver immediate relief at the checkout to our customers. Whether it’s a leg of lamb roasting in the oven, a freezer full of batch-cooked meals, or a simple stir-fry to feed hungry mouths, Coles is helping households make meals they love at lowered prices.”
There will also be price cuts at its liquor arm, with Coles offering 10 per cent off at Liquorland for customers purchasing six bottles of wine.
JP Morgan analyst Bryan Raymond told The Australian the discounts and promotions offered by Woolworths, Coles and Aldi were rational to regain supremacy among shoppers, with the addition of more potent FlyBuys points by Coles introducing extra firepower.
“It is certainly rational at the moment, as it is rational to invest in value in a measured way in order to restore price perception. This was initially led by Woolworths’s Lower Shelf Price program. Coles’s Winter price drop program is part of the normal promotional cycle, however the 10 times FlyBuys bonus points for four weeks on a large number of products is taking a bit of a different approach,” he said.
“Loyalty points boosts are not as effective in driving sales as price cuts but it is a complementary way to drive value for shoppers outside of straight discounts on products, and is focused on customer retention as these are shoppers typically engaged and already loyal (Coles) customers. It’s also less likely to be replicated and competed away as Aldi doesn’t have a loyalty program. Woolworths can and do have similar offers with Everyday Rewards.”
Mr Raymond said he believed Woolworths had “a bit more pressure on them than Coles to restore sales momentum and customer trust.”
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