Woolworths expands budget range as more Aussies cook at home amid cost of living pain

The retail heavyweight is rolling out a broader range of cheaper home brand products as consumers struggle with their weekly food bills.

Woolworths sales growth improved modestly across the group, but its Big W division is heading to a $70m loss.

Woolworths is broadening its range of cheaper home brand products as the retail giant warned consumers were continuing to struggle with managing their weekly food bills.

Chief executive Amanda Bardwell said people were eating at home more often to balance their grocery budget and wanted discounts and cheaper pantry ingredients.

“We’re seeing a lot of value seeking across our grocery areas, and that’s where we’re experiencing increasing demand for our own brands, whether that’s in olive oil or cooking needs-type products,” she said.

“More customers are wanting to cook at home. Our own brands are on average 30 per cent cheaper than a branded product. I think that’s really resonating with customers.

“Value seeking behaviour continues to be a pattern that we’re seeing from our customers as they continue to be really challenged by cost of living and managing their day-to-day and week-to-week budget.”

Woolworths’ smaller competitor Coles said on Wednesday that people were eating several meat-free meals each week and cutting back on treats and bottled water to save money. Consumers are also more prepared to shop at a greater variety of retailers to get the best prices, which Coles chief executive Leah Weckert described as a significant change in buying habits, and draining their rewards points.

However, Woolworths’ subscription loyalty tier, Everyday Extra, has stoked social media outrage by eliminating a 10 per cent discount at Big W offered monthly to members. The scheme costs $70 annually.

Woolworths on Thursday reported that sales growth improved modestly across the group, but its Big W division general apparel and merchandise retailer was headed to a $70m loss for the second half.

Total food sales increased by 3.6 per cent to $13.05bn, contributing to total group sales of $17.31bn, up 3 per cent.

Own-brand demand continued to outperform in the quarter with growth of 5.7 per aided by strong interest in pantry staples, frozen foods, snacks and household care products.

Citi said Woolworths’ food sales had come in slightly ahead of the 2.6 per cent forecast by analysts. Volume growth had lifted, aided by its Minecraft collectables campaign.

Woolworths says people were cooking more at home to balance their grocery budget. Picture: Brendan Radke

Ms Bardwell conceded Woolworths still had work to do to rebuild customer trust and relationships, and the retailer had already implemented a number of recommendations from the recent ACCC report into supermarket pricing.

The value of both major supermarket brands has slumped on allegations of false discounting, which the retailers deny. According to Brand Finance Australia’s annual report released earlier this year, Woolworths and Coles’ brand value plummeted by a combined 31 per cent over the last 12 months.

Woolworths’ estimated brand value fell 17 per cent to $12.7bn in 2024, while Coles’ brand value dropped 14 per cent to $8.4bn. Combined, the major supermarkets’ value dropped $4.1bn.

Ms Bardwell said that over the past 18 months, Woolworths had simplified promotional programs and made specials and other offers clearer through improved ticketing in its stores.

It also had supported the introduction of a mandatory food and grocery code of conduct, with serious penalties for large grocery businesses.

“We’ve worked hard with our teams to make sure that when we’ve got these great promotions visible in store, that the stock is available when the customers need it and that we are continuing to offer great reasons for the customers to choose us,” she said. “Price is absolutely important for our customers, but so is the overall experience.”

She said despite the general belt-tightening across the economy, customers had splurged over Easter on almost 70 million hot cross buns and 8.2 million chocolate bunnies.

“We have seen huge uptake in our more indulgent range including the new Cinnabon Hot Cross buns which sold out quickly in the lead up to Easter,” she said.

Ms Bardwell said that even with the rising cost of cocoa internationally, Woolworths had worked hard with suppliers to deliver great value across its Easter category.

“More than 27.5 million units of Easter chocolate was sold,” she said.

Woolworths reported online growth of 16.3 per cent during the quarter.

Of Big W’s four trading segments, clothing returned to growth. However, increased markdowns were required to accelerate sales of its spring-summer range.

Woolworths had supported communities impacted by adverse weather events across Queensland and Northern NSW during the quarter.

In partnership with the Federal Government and the Australian Defence Force, it also supported the Ingham community by airlifting pallets of drinking water and essential groceries to provide supplies to residents isolated by flood waters.

“I would like to recognise the incredible efforts of our team to support weather affected parts during the period,” said Ms Bardwell.

Woolworths shares were up 1.2 per cent to $31.94 on Thursday.

Originally published as Woolworths expands budget range as more Aussies cook at home amid cost of living pain