Woolworths has 99 reasons but a cent ain’t one

WOOLWORTHS’ latest strategy may have just inadvertently signed the final death warrant for Australia’s embattled 5 cent piece.

Leave your 5c coins at home if you’re shopping at Woolworths. Picture: Jamie Hanson

THE nation’s biggest supermarket may have signed the final death warrant for the embattled 5c piece.

Bucking decades of retail wisdom that prices should end in 95c or 99c, Woolworths says it is moving all of its prices to round numbers.

Whether prices are rounded up or down, the supermarket says ultimately it aims to move all of its 20,000 products to rounded pricing.

“At Woolworths, we’re focused on making the shopping experience easier and more convenient for our customers,” Woolworths head of buying and merchandising Steve Donohue said.

“Rounded pricing is not a formal program as such, but we know pricing this way makes budgeting simpler for the customer. Our customers have responded well to the initiative across the store, particularly the value it has also brought across our Prices Dropped and Low Price Always range.”

Coles, which introduced $2 milk in 2011 and $1 bread the following year, still has a number of prices ending in 99c, 95c, 45c or 50c.

“Coles aims to provide customers with simple price points to help add up the cost of shopping and manage weekly budgets more easily,” a spokesman said.

“Across the store, Coles’ prices have been falling for seven years and we remain committed to continue lowering the overall cost of a weekly shop for our customers.”

German discounter Aldi hasn’t yet joined the round number bandwagon, with many prices in its latest catalogue still ending in 99c, 69c, 35c or even 21c. IGA’s latest catalogue, too, has prices ending in 49c, 89c, 8c and 64c.

Retail consultant Ron Wood, founder of Pricing Insight, said the move to round numbers “would have been modelled in three different ways” by Woolworths’ big data firm Quantium.

“There is no question that this strategy is designed to improve Woolworths’ profitability, not reduce it,” Mr Wood said.

He said the move would cause a “big headache” for food manufacturers. “Suppliers have had to change pack sizes and format to suit retailer demand for years. This demand will be no different. The big headache will be when food manufacturers need to increase prices by an amount that leaves the price in no-man’s land.

“The pack sizes will change and this will take consumers back to where we started except we will have round price points but varying pack sizes.”

The death of Australia’s tiniest coin, which now costs 6c to make, has been talked about for some time. In November, Prime Minister Malcolm Turnbull said ditching the 5c piece made sense.

While the Australian Mint produced about 20 million of them last year, the growth in contactless payments and decline in cash has seen demand for 5c pieces halve since 2011. “It’s lost its utility. It will lose interest from the public,” Mint chief executive Ross MacDiamid said last February as the coin marked its 50th birthday.

Should the 5c piece be phased out altogether, retailers would be forced to round up or round down their prices. It seems Woolies has already flipped the coin.

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