Woolworths slashes prices on 400 grocery items to compete with Coles in supermarket specials

Amid a cost-of-living crisis and political attacks on supermarket profit gouging, Woolworths says it will slash prices on almost 400 common grocery products.

Woolworths says it will cut prices in response to cost-of-living pressures on Australian households.

Woolworths boss Amanda Bardwell has unveiled her maiden pricing strategy since taking the reins of the supermarket giant last year, announcing a more than $100m investment in lowering shelf prices across almost 400 common grocery products.

Ms Bardwell said she had “listened to customers” and Woolworths was now acting “to do more” on the bill at the supermarket checkout.

Underlining her determination to do better after a disappointing run of Woolworths earnings and sales, Ms Bardwell said the lower shelf prices for the selected 400 grocery items wasn’t just a one-off promotion, but would run every week until 2026.

The move follows months of outperformance by Coles in terms of sales growth, which triggered the dialling up of complaints by Woolworths shareholders to use some of the $400m Ms Bardwell targeted in a new cost-out program, announced earlier this year, to push down prices and return the nation’s largest supermarket to its glory days of sector ascendancy.

But it is possible Coles will fire back with its own promotion and price-cutting campaign to meet the new challenge from Woolworths, sparking perhaps a new round of price wars among the majors.

Ms Bardwell’s fresh pitch to shoppers who have been wooed in recent times by Coles’ perceived better pricing and store experience comes as the nation’s supermarket chains face threats of new legislation from a returned Albanese government to introduce financial penalties for supermarket price gouging, and a current court case launched by the competition regulator over alleged fake discounting.

Ms Bardwell is also having to deal with investors growing anxious over Coles’ recent outperformance.

Amid the cost-of-living crisis that has endured for at least the last two years and which many observers and politicians have blamed the supermarkets for exacerbating with higher-than-fair grocery prices, Ms Bardwell will use some of the savings from a $400m cost-cutting drive to lower the cost of some groceries. These products will include key groceries from nappies and yoghurt to Coca-Cola and bacon.

While Woolworths will invest $100m of its own money to bring down the price of some of its private label products, it will also work with food and grocery suppliers to reduce the shelf price for branded groceries.

“Customers are still experiencing cost-of-living pressures, and in listening to those customers, we know they are looking for us to do more, and we are acting today by reducing the prices on over 400 products,” Ms Bardwell told The Australian.

“We’re looking at investments across our business and investing, of course, in all different aspects of customer experience. For this announcement, we’re sharing that we are investing substantially in our own brand ranges, in our quality, highly rated products that are very frequently in a customer’s basket.

“So there is an investment that Woolworths is putting in directly into this adjustment that we’ve announced today. And then we are also partnering with our supply partners for some of those branded lower shelf prices that customers will be able to find as well.”

Ms Bardwell would not directly comment on the competitive heat coming from Coles, which according to some analysts, has won market share continuously since the second quarter of last financial year, and has notched up superior sales growth. For the third quarter, Coles grew total sales by 3.7 per cent, against 3.6 per cent for Woolworths, and for the December half Coles had sales growth of 4.3 per cent to easily eclipse the 2.7 per cent sales growth for Woolworths supermarkets.

“This is really about us recognising that customers have told us that they really want more value and they are expecting us to do more,” Ms Bardwell said.

“(Customers) want more value in the store and in a more dependable way, and so this is not a promotion, this is very much saying every day of the week, week in, week out, all the way through to 2026, customers will be able to rely on these lower shelf prices across 400 products.”

On Monday, Woolworths announced its lower shelf prices for hundreds of everyday essentials and family favourites in store and online would take effect from Wednesday.

The shelf price of included products will fall by an average of 10 per cent. Families spending $150 on their weekly shop could save, on average, about $15 a week when buying lower shelf price products, Woolworths said.

Woolworths chief executive Amanda Bardwell. Picture: Renee Nowytarger

These products will stay at the new “Lower Shelf Price” at least until 2026. The common basket products across private label and branded groceries include schnitzel, Greek yoghurt, bacon, frozen mixed berries, Woolworths oats, Coca-Cola, Babylove Nappies and Maggi noodles.

The pledge on prices also has a political dimension and follows Anthony Albanese’s promise at the start of the federal election campaign to introduce legislation to financially penalise supermarkets caught “price gouging”, an announcement that at the time sent shockwaves through the boardrooms of Woolworths and Coles.

Amid a political firestorm of the last few years which has involved both supermarket chains being attacked by politicians and investigated by a Senate committee, state parliament committees and the Australian Competition & Consumer Commission over high shelf prices, Woolworths is now shifting gear to bring down the bill at the checkout. The ACCC has also launched legal action against Woolworths and Coles, accusing them both of using fake or illusory discounts to lure in shoppers.

“This (profit gouging legislation) hasn’t been what we’re focused on, we are focused on customers and we really believe that Woolworths, if we focus on what it is that customers want first, and we get that right, and we continue to get better, customers will choose us first and continue to shop with us across their full basket,” Ms Bardwell said.

“And so that’s why we’ve been really thoughtful about how it is that we can help customers save on their weekly basket and in lots of different lines that really matter the most to particularly families.”

The price move comes as Coles recently posted stronger sales growth than its larger rival as Woolworths was viewed by some shoppers as not being as competitive on price as Coles.

Woolworths is lowering prices on almost 400 grocery products. Picture: Joel Carrett

Ms Bardwell faced increased pressure in recent months from investors and analysts to reduce Woolworths’ shelf prices and be more competitive with Coles.

“Customers consistently tell us they need more value from their shop, and that they expect us to do more to help,” said Ms Bardwell on Monday.

“Today marks the start of a real, tangible change customers will see on the shelf prices of hundreds of products when they shop with us, both in-store and online. And it’s just the beginning.”

“This isn’t just a short-term promotion; it’s about lower shelf prices on the products we know customers regularly shop for, and providing genuine, lasting and dependable value they can count on.

“Individually, each lower shelf price might not seem like a dramatic difference, but they will add up to real savings.

“We are committed to expanding the Lower Shelf Price product list in the coming weeks and months to help provide customers with even more value every time they shop with us.”