supermarket price war: Coles fight against Woolworths

Australia has the most concentrated supermarket industry of any country in the world.Each week, every man, woman and child in Australia spends $100 each at Coles or Woolworths outlets( Mitchell 2015). Every time when Coles claim to cut-price, Woolworths will fight back immediately, then there always exist price war between the two major supermarkets go head-to-head to win market share.

1

source: http://www.smh.com.au/

however, in the Coles and Woolworths debate, it is very difficult to know which supermarket is better for you unless you have a clear cut favorite. Therefore, a few everyday household items with these prices were taken recently are collected to see where the cheapest in terms of Coles and Woolworths prices:

Product Coles Woolworths
Nutella 400g $5.50 (1.38 per 100g) $4.99 ($1.25 per 100g)
Twinings Black Tea Earl Grey Tea Bags 10pk 20g $2.74 ($13.70 per 100g) $2.49 ($12.45 per 100g)
Vegemite 380g $6.60($1.74 per 100g) $5.99 ($1.58 per 100g)
Huggies Girls Nappies Walker13-18kg 32pack $16 (0.50 each) $16 ($0.50 each)
Earth Choice dishwashing liquid 900ml $5.89 ($0.65 per 100ml) $4.00 ($0.44 per 100ml)
Colgate Total Toothpaste Advanced Clean 190g $5.00 ($2.63 per 100g) $7.00 ($3.68 per 100g)
Sunrice Jasmine Rice 450g $3.50(0.78 per 100g) $3.50(0.78 per 100g)
     TOTAL 45.23 43.97

See the result, Woolworths beats Coles hands down, with this shop coming in just over $1.26 cheaper. While products often look like they’re the same price, there are a few instances of Woolworths stocking a slightly smaller product, bring the price per 100g up, and ultimately making customer pay the same price as Coles but getting less in return.

Those two supermarket retailers cut the price of numbers of items to battling to maintain and grow their market share, and stop customers from switching to discounter Aldi. Last few weeks , Coles has slashed the price of its three-biggest selling grocery brands, Sunrice, Kleenex and Colgate (Low 2016). Woolworths has slashed its world-leading margins, after a number of surveys showed the retailer was more expensive than its rival Coles( Mitchell 2015), and both were much more expensive than Aldi. both Woolworths and Coles has been struggling to grow sales, with consumers obviously switching to lower-priced competitors. Especially, Coles launched Every day Value discounts strategy , it boost sales at Coles supermarkets.

2

source: http://www.smh.com.au/

Obviously, Coles and Woolworths like low pricing strategy and competitive strategy to reinforcing their values of brand, attracting new customers out of competing, major players and rewarding the loyalty of its existing shoppers. Because in supermarket, product sold are homogeneous, so cost, price, and offers of the competitors is a big focus for Coles and Woolworths(Iacobucci 2014,p.117). Furthermore, the factor that customer willingness to pay is also a main consideration, hence, the lower promotional prices are usually designed to attract customer, temporary price discounts make customers think they are smart buyers, especially, when they see’ special’ and’ save’ label on the shelves, that will leave impression(Iacobucci 2014,p.116).

In fact, not everyone shops at supermarkets based on price alone. Location and convenience is usually the main driver of where consumers shop, with price and value behind that, shopping experience, service, and inspiration followed. Aldi deals almost exclusively in home brand products. Consumers may find easy to make choice of just two or three in Aldi rather than a selection of five or six brand name products in a category in Coles or Woolwoths (King 2016). However, when consumers are comparing home brand to home brand – the decision is more than likely to come down to price. Even if there are many other approaches can stimulate the sales in the supermarket industry, pricing consideration and approaches is main drives to keep competitive advantage.

Reference:

Iacobucci, D 2014, Marketing Management (MM4), South-Western, Cengage Learning, Mason.

King, M 2016, ‘supermarket price war erupts: Coles fights back against Woolworths Limited’, The Motley Fool, 4 March16, retrieved 2 May 2016 ,<http://www.fool.com.au/2016/03/04/supermarket-price-war-erupts-coles-fights-back-against-woolworths-limited/&gt;.

Low, C 2016, ‘Coles, Woolworths, Aldi price war gets personal with cut-price tissues and toothpaste’, BusinessDay,4 March16, retrieved 2 May 2016 ,<http://www.smh.com.au/business/retail/coles-woolworths-aldi-price-war-gets-personal-with-cutprice-tissues-and-toothpaste-20160303-gn9m2e.html&gt;.

Mitchell, S 2015,’Woolworths downgrade raises UK-style price war fears’,3November2015, retrieved 2 May 2016 ,<http://www.smh.com.au/business/retail/woolworths-downgrade-raises-ukstyle-price-war-fears-20151102-gkosys.html&gt;.

WordPress  username: zyuya

Student name : Yuyang Zhang

Student  ID:215416921

Email: zyuya@deakin.edu.au

 

 

 

 

 

 

 

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s