Woolworths atones for reward card bungle by slashing the price of everyday items

WOOLWORTHS has singled out a major grocery staple to kick off its new price war with Coles, and the supermarket chain is just getting started.

Woolworths Supermarkets Ahead Of Annual Results

WOOLWORTHS has embarked on a price-slashing blitz that aims to win back customers turned off by its unpopular reward card changes.

The supermarket is cutting prices on grocery staples, focusing on one category a week over the coming month.

First off the block are bakery goods, with baguettes baked in-store reduced from $1.65 to $1.50 and a 700g loaf of Tip Top The One bread down from $3.89 to $3 across most states and territories, excluding Tasmania and the Northern Territory.

Woolworths Select Muffins eight packs are down from $4.50 to $3.50, while Cheese and Bacon rolls six packs are $4.50, down from $6 and a 24 pack of Woolworths Anzac or Choc-Chip Cookies is $5, down from $5.79.

Roast chickens have already been reduced to $7.90, following Coles’ lead after it slashed its barbecued chooks from $11 to $8 in February.

Woolworths’ head of buying, Steve Donohue, said pasta and soft drinks were earmarked for reductions in coming weeks, with San Remo pasta to be reduced from $2.45 to $1.95 and two-litre bottles of Pepsi from $3.10 to $2 (down from $3.20 in South Australia and the Northern Territory).

First it was roast chicken. Now Woolworths has brought its bread pricing in line with Coles.

Mr Donohue said the reductions, which in many cases bring prices into line with competitor Coles, would carry over after the month’s end.

“This latest round of reductions means both staples and a few treats will be available at great low prices not just this month but into the future as well,” he said.

It comes after retail analysts last week blamed weak same-store sales growth and market-share losses on Woolworths’ disastrous new customer loyalty program, flagging storewide discounting as the retailer’s only hope for a recovery.

UBS analyst Ben Gilbert has argued that loyalty programs are less important than lower everyday shelf prices when it comes to building customer loyalty, citing Aldi as an example.

“People have been inundated by loyalty programs with the targeted promotions and activations,” Mr Gilbert told AAP.

“If consumers can trust that they can go into your store everyday and get the best price, that is ultimately what will drive them back again and again.”

Woolworths’ revamped Everyday Rewards program went down like a lead balloon when its was unveiled last year, replacing the age-old Qantas Frequent Flyer program with “Woolworths Dollars”— which are earned only on orange-ticketed items, rather than on every dollar above $30 spent.

Shoppers, who found the new system confusing, reacted with disgust when they worked out that it delivered fewer rewards.

One customer who spent $1279.39 at Woolworths supermarkets over four months received a total of $4 of Woolworths Dollars, an average earn rate of 0.3 per cent — well below the retailer’s benchmark 1.5 per cent earn rate.

New Woolworths boss Brad Banducci is battling to reverse the backlash. Picture: Brett Costello

In February, new chief executive Brad Banducci admitted the orange tickets were hard to find and brought in a new offer of $1 Woolworths Dollar for every $10 customers spent on fresh foods.

The retailer last week brought back Qantas points for select Everyday Rewards members, in response to the backlash. The offer will be extended to all customers in coming months.

A Coles spokesman said in a statement that it had put more than 2000 products on Every Day low pricing over the past 12 months. Prices are in place for a minimum of six months.

Tip Top The One bread is already $3 at Coles, while a nine-pack of Coles Mini Muffins in Blueberry or Choc Chip costs $3.50 (the same price as an eight-pack at Woolworths).

Coles Cheese and Bacon Rolls cost $3 for a four pack, making them 75 cents each, the same price per roll as Woolworths’ new pricing.

Likewise, Coles Anzac biscuits or Choc Chip Cookies are $2.50 for a 12 pack, costing the same as Woolworths’ new $5 for a 24 pack. As for cheap pasta, Coles has Barilla 500g varieties priced at $1.90.

“We have been constantly cutting prices for the past seven years, and we’re continuing to reduce costs within our business so we can lower prices even further,” the spokesman said.

“Coles has recorded 19 consecutive quarters of price deflation across the store, including a 1.2 per cent reduction in the first half of the financial year.”

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