01.Supermarket price wars
The Big Two supermarkets are claiming cheaper grocery prices now today than a year ago, but our investigation found otherwise.
Coles and Woolworths are locked in a price war, with each supermarket launching big advertising campaigns claiming they’ve reduced the prices on popular grocery items. CHOICE wanted to see if there was any weight to these claims and whether consumers would see much of a change at the checkout, so we grabbed our shopping list and headed to various Coles and Woolworths stores in and around Sydney.
What the supermarkets say
In January 2010, Woolworths announced it had reduced the standard shelf price of 3500 grocery products, making them cheaper than they were 12 months ago. This was in addition to the 2000 weekly specials offered by the retailer in-store.
More recently, Coles claimed it had slashed the price of a basket of household grocery staples by an average of $15, and that its latest pricing campaign featured savings on more than 1000 popular products.
We compiled a list of household items using our 2009 supermarket survey shopping list (see Check Out Your Groceries, CHOICE December 2009/January 2010, page 22) and price information collected a year ago for GroceryCHOICE. Our basket included bread, milk and eggs, as well as breakfast cereals, apple juice, biscuits and toilet paper.
We compared prices at five Woolworths stores in Sydney suburbs over a three-month period from February to April. In June, following their announcement they had also dropped prices we visited five Coles stores in the same or comparable suburbs following their announcement they had also dropped prices. We then compared the current prices with those from the same month one year ago. For items that were on special on the day we shopped, we noted the usual price for that item.
What we found
At both Coles and Woolworths, we found there was very little change in the overall price of our basket. In fact, in most cases our basket was, on average, slightly more than it was for the same month last year. At Woolworths, the average price of a shopping basket over a three-month period in 2009 was $161.88. Over the same period in 2010, the average was $162.01. In 2009, the average cost of our basket at Coles was $162.75; the cost in June this year: $163.33.
Of the 35 products on our shopping list, only seven were cheaper now than a year ago; most were more expensive or exactly the same price. On a more positive note, we did notice that all the stores within Sydney had moved towards uniform pricing.
We would like both Coles and Woolworths to publish store-based prices online. Woolworths has already started doing this on selected items, but we see no reason why they cannot publish the prices across their entire product range. Both stores should also include an interactive function so that consumers can calculate the price of their own basket of groceries. Without better grocery prices information online, consumers can’t tell whether claims of lower prices will mean they pay less at the checkout for their favourite items. Our survey found shoppers will only see savings if they’re prepared to switch to the limited range of products that Coles and Woolworths want them to buy.
Don’t change where you shop based on a supermarket’s claims of lower prices. The price reductions only apply to a limited range of products, and they might not be the ones you trust or buy regularly.
For more information and the full results of our survey, see the full article at CheckoutCHOICE.