Consumer wins as Woolworths, Coles and Aldi do battle

AS THE battle between Australia’s grocery giants intensifies, the only sure winners will be consumers.

CUSTOMERS will be the big winners as grocery giants Coles and Woolworths battle each other for supermarket supremacy while fending off the growing threat from Aldi.

Retail industry experts and consumer advocates say shoppers can look forward to more savings at the checkout as a price war intensifies.

THREAT: Woolies tactic not working

PRICE WAR: Big three face off

Woolies fired the latest salvo this week, ditching its frequent-flyer points deal with Qantas in favour of a new ­rewards program that earns discounts off the contents of shoppers’ trolleys.

“It is fiercely competitive,” said Brooke Tonkin, an industry analyst with IBISWorld.

“Competition is good news for consumers because it pushes prices down.

“There is very little customer loyalty (to individual chains). Price is the only thing getting customers through the door.”

An analysis by The Courier-Mail shows that prices across both supermarkets have fallen over the past five years on items such as olive oil, butter, bread, beef mince and other kitchen staples.

People were happy to go to multiple supermarkets to get the best deals and that was exacerbated by a trend of more frequent visits replacing one big weekly shop.

Woolworths has a 40 per cent share of the $88 billion-a-year supermarket and grocery trade, while Coles (and its sister brand Bi-Lo) has a 33 per cent slice.

But the gap is narrowing, with Coles’ sales growth outstripping Woolworths for the past six years. Coles’ revenue rose almost twice as fast as its rival over the past three years thanks to price-driven advertising such as the Down Down campaign.

Woolworths’ Cheap Cheap campaign response, however, was quickly dumped after poor feedback.

It was replaced with the “Low Price, Always” marketing – and Coles has answered with its Every Day promotion.

“Price is the absolute determinant of where we shop. It is critical,” Brand Genetics marketing specialist Allan Bonsall said.

“A few decades ago, 95 per cent of customers were loyal to one brand or another based on convenience and locality of the supermarket.

“The other 5 per cent ­cherry-picked the catalogues to find the best specials.

“Today, they are striving to persuade people that the total cost across the whole product range will be less than if they shopped at the opposition.”

Woolworths has spent about $300 million on cutting prices since February and plans to invest $600 million more on the same strategy.

While the two heavy-hitters slug it out, both are casting a cautious glance over their shoulder at the rising success of Aldi, which has captured 8 per cent of the market.

Spokesman for national consumer group Choice Tom Godfrey said the “Aldi effect” was already having an impact.

The spread of home-brand or private-label products across Coles and Woolworths shelves was a direct result of the two chains delivering lower-cost options to try to avoid losing custom to Aldi, which does not stock any big-name brands.