Woolworths and Coles bin weekly specials in favour of everyday lower prices

Both supermarket giants have announced major changes to the pricing of everyday grocery items, and say it will help ease the stress on weekly budgets.

Shoppers can expect to see fewer one-off special discounts on grocery items, where prices are drastically cut for a short period, after both major supermarkets signalled they want to focus on their everyday lower pricing strategy.

Both Woolworths and Coles want to gain “price trust” from their consumers by removing short term specials, instead focusing on more permanent lower prices.

Woolworths want to gain “price trust” from its shoppers. Picture: AAP/Joel Carrett

Woolworths director of buying Peter McNamara said cost-of-living pressures were weighing on Australian families, who were constantly searching for the best deals to reduce expenses.

But a constant barrage of discounted advertising meant consumers have become pessimistic of whatever the latest deals are.

He said a promise to lower prices more generally would allow shoppers to have more faith when the heavy discounted campaigns were announced.

“We know customers are always looking for specials, and we see them being a part of our business for a very long time,” Mr McNamara said in a statement to news.com.au.

“But specials are only a great deal for that individual week, and we’re increasingly focused on delivering customers fairer and more consistent prices each and every week.”

He said the supermarket giant had reduced promotion in the past two years by 17 per cent.

“However, we will continue to offer a great range of specials on the products that matter most to our customers,” Mr McNamara said.

“We know price trust is one of the key drivers for our customers, and will continue to work hard to gain that trust.”

Coles has a similar plan to its rival. Picture: AAP/Joel Carrett

Coles general manager grocery Anna Croft made similar comments at the Australian Food & Grocery Council’s annual summit this week.

She said the business had become too reliant on promotions and was discounting in categories it shouldn’t be promoting.

Ms Croft also acknowledged customers had developed sales fatigue with an approach that was harder to manage from a supply chain perspective.

“We have to work on how to develop everyday low prices — we have spent 10 years trying to crack this and haven’t done it yet,” she said according to reports from The Australian Financial Review.

“We know it’s hugely important to customers and we need to do it in a sustainable way and manage the decline [in promotions] over time versus going cold turkey.

“We’re still working through what that looks like.”

Supermarket promotions in the past decade had moved from a high quantity of promotions with very little discounting to fewer promotions but much deeper discounting, Queensland University of Technology associate professor Gary Mortimer said.

“It’s now become more common to see 50 per cent off and half price sales in food and groceries, and we know that the margins simply aren’t 50 per cent,” he told news.com.au.

“That relentless slashing of prices by 40 or 50 per cent continues to damage margins and continues to impact on suppliers who also have to subsidise some of these discounts.”

Dr Mortimer said this strategy had created a price-obsessed audience who were simply unwilling to pay the full price for groceries, who focused more on price rather than quality and value.

“The next move by supermarkets will be to slowly step away from these significant price reductions and develop a more consistent everyday low price strategy,” he said.

This has been tough on suppliers such as Australian farmers but dramatic sales fluctuations are also hard for consumers to predict grocery costs and stick to a budget.

“Consumers often complain that they just missed out on a great special because they shopped a day later or their favourite brand of fuel that was 50 per cent off last week isn’t 50 per cent off this week,” Dr Mortimer said.

“It’s really hard as a consumer to get a level price in your food and grocery shopping.”

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