Rae Wilson

Supermarket wars: how does CQ rate at the checkout?

WHILE rental prices in the coastal Central Queensland town of Yeppoon may be a tad on the high side, it seems residents are getting a better deal at the supermarket checkout with prices for staples considerably lower than in towns and regions to its south.

A basket including bread, milk, sugar, mince, baked beans and potatoes cost shoppers $19.43 at Woolworths, was 20 cents cheaper at IGA with Coles the most economical at $17.58. Interestingly, item prices were similar across the board with Woolworths disadvantaged by the cost of its premium mince ($6.50) with specials at Coles and IGA casting the latter two in a more favourable light.

Woolworths shoppers in Gladstone, 150km down the Bruce Hwy, would be forgiven for feeling a little peeved. They paid $27.36 for the same basket with the supermarket putting the variance down to store specials and the price of locally-sourced produce. Gladstone's IGA ($24.06) was almost five dollars dearer with Coles the most consistent at $17.83.

The news was much better in Mackay, north of Yeppoon, with the same basket there most expensive at the IGA ($21.72) followed by Woolworths ($20.33) and Coles $18.35.

In Bundaberg, the closest town with a low-cost Aldi supermarket, the items cost a total of $15.90.

DISCREPANCY IN PRICING

Coles and Woolworths both claim to adopt State-based pricing to ensure their customers get value for money. But time and again this grocery basket survey shows there are indeed differences in prices - that cannot simply be explained away as a margin of error - both in neighbouring regions and in stores clear across the State.

It is interesting, for example, that the same basket cost $27.36 in the Woolworths at Gladstone but $19.43 in Yeppoon and $20.39 in Warwick. Or that the same 2l bottle of milk can vary so much not just across regions but within the supermarket chain itself.

Coles suggested the discrepancy was more about survey error than a variance in their prices.

"Transport costs and the use of a range of suppliers for some products in different states also mean that prices won't be exactly the same in every state for all items," a spokesperson added.

Woolworths took the same tack.

"Our pricing is state-based," their spokesperson replied. "Prices in almost all cases are the same in the state capital as in regional areas. The prices for some items, in particular produce, vary from state to state as we tend to source these products locally if possible. Comparing Ipswich in Queensland and Lismore in New South Wales will not take this into account nor will it include different specials run in each state."

 

THE ALDI FACTOR

Research shows that where the low-cost supermarket giant dares to tread, a drop in grocery spend is sure to follow.

When Aldi arrived on our shores in 2001, it was dismissed as a bit-part player with a reliance on a small number of non-branded products. Now the German giant has some 382 stores along the eastern seaboard with plans to open 25 new stores a year for the next five years. There are also plans to open 50 additional stores in South Australia and 70 in Western Australia.

Let's not forget that Aldi is the eighth largest food retailer in the world. Woolworths is 17th and Wesfarmers-owned Coles is 18th. Aldi's tailored product list and its smaller stores means the chain can cut costs and occupy smaller, more advantageous suburban locations.

"Aldi's value offering is both simple and compelling - high quality products at permanently low prices every day, saving our customers time and money," said a company spokesperson.

"We deliver hard-to-beat value because our streamlined business model enables us to keep our prices low. We eliminate costly extras and overheads by selecting only the best products in each category, selling a select range of exclusive brands, displaying products in reusable crates and not giving out plastic bags, which encourages customers to recycle. Our value proposition is universal in its appeal and we are as popular in the city as we are the suburbs and the country."

Basket of six grocery items used to compare supermarkets across 14 regions in Queensland and northern NSW in October 2015.
Basket of six grocery items used to compare supermarkets across 14 regions in Queensland and northern NSW in October 2015. Rae Wilson

BRAND LOYALTY

Research shows that in the last five years especially, customers feel very little sense of loyalty to either supermarket chains or the brands they carry, listening instead to their hip pocket.

That, aside from the low prices, is one of the reasons Aldi is so successful.

"Recent data from Roy Morgan suggests around 70% of shoppers visited an Aldi in 2014, so we are gaining ground in terms of footfall and shoppers' understanding of the discount retail format," said the company spokesperson.

"Aldi's unique value offering of high-quality products at permanently low prices resonates with many grocery shoppers. As people become more familiar with shopping at Aldi, many of our exclusive brands have earned a place in the hearts and minds of shoppers."

The acceptance of the German supermarket's non-branded offerings has also served to increase sales of home-brand products at Coles, Woolworths resulting in those two expanding their plain packaged ranges to include premium generic labels.

"We are a house of brands," said a Woolworths spokesperson.

"We stock the products Australians know and love. Roughly 15% of our sales are own-brand products. We offer customers choice by providing a selection of our own-branded products including Homebrand, Select, Gold and Macro. We've also teamed up with Jamie Oliver and Kylie Kwong to promote cooking from scratch through their own branded ranges."

BUYING LOCAL

While budget constraints play a large part in the grocery shop, Australians on the whole favour local produce. Recent instances of food contamination have even prompted us to cast a discerning eye over frozen fruit and vegetable.

Woolworths, Coles, Aldi and even IGA (who failed to answer our questions), pride themselves on using local produce although the big two's enthusiasm may be somewhat tempered by claims from producers that they have been exploited.

"Woolworths supports local producers where possible and will source produce locally where sufficient items of the quality our customers expect can be found," said a spokesperson.

"Clearly produce is seasonal and most produce grows in specific regions. Not all produce is grown everywhere all year round. Woolworths sources the best produce from the appropriate growing region. Ninety-six percent of our fresh fruit and vegetables are Australian grown."

Aldi is singing from the same hymn sheet.

"At Aldi, we know that Australians are mindful of buying local produce, with a number of people particularly conscious of how their buying decisions can support jobs and the economy," the company replied.

"Currently over 91% of Aldi's fruit and vegetables are Australian grown, 93% of Aldi's fresh dairy products are Australian made and 100% of our meat and fresh poultry, eggs and bread are Australian made. We only source products from overseas when we can't find the product, quality, efficiency or innovation we seek here in Australia."

 

Thinkstock

VALUE FOR MONEY

Whether we choose to believe it or not, all four of Australia's largest supermarket chains claim that a concerted effort is being made to keep prices down and offer customers the best bang for their buck.

"Coles is totally committed to reducing prices for regional communities because we want to ensure local residents get great value at Coles to reduce their cost of living as well as excellent customer service and the same extensive range of products that shoppers in capital cities can buy," said a spokesperson.

"Over the past five years across Australia, Coles has reduced prices by an average of 1.5% every year while during the same period inflation has risen by an average of 1.5% each year."

Our survey shows that some chains are clearly more effective than others when it comes to real-world savings with Aldi leading this price war at present, a trend likely to continue into the foreseeable future. They already hold an 11% market share and expansion into South Australia and Western Australia will only see that number grow. Their success in getting consumers to accept and seek out quality but unfamiliar brands is a lesson in how economics dictates choice. 



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