Woolies will 'absorb' price cuts

29 May, 2013 07:00 AM
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WOOLWORTHS has unveiled another round of "permanent" price reductions on hundreds of grocery products in a bid to boost foot traffic and sales.

Australia's largest grocery retailer has cut the price of fresh foods such as meat and packaged groceries such as bread and cereal by as much as 30 per cent, promising to retain the lower prices for at least six months.

Woolworths says it will absorb 100 per cent of the reductions on meat and produce but the discounts in packaged groceries will be funded by suppliers.

Woolworths will give these suppliers more shelf space in anticipation of higher volumes and is investing in catalogue and television advertising to promote the new price cuts. Woolworths has been tapping suppliers for better deals as part of its strategy to "defend and extend" its share of food sales.

Same-store sales growth at Coles, which has cut prices on more than 5000 grocery products as part of its 'Down Down' campaign, has exceeded that at Woolworths for 15 consecutive quarters. Analysts expect the trend to continue in the June quarter.

Coles managing director Ian McLeod said the chain had cut prices on a wider range of products over three years and many products discounted by Woolies were cheaper at Coles.

AFR
Date: Newest first | Oldest first

READER COMMENTS

john from tamworth
29/05/2013 1:18:39 PM

The fact that both these companies are cutting prices on thousands of items by up to 30% indicates the huge margins they have been sitting on for years.It also shows just how successful they have been in feeding up misinformation to all those ACCC enquiries.Woolworths and Coles have moved past the point of being a duopoly and are now acting more like a cartel.
rcg
29/05/2013 2:23:42 PM

Yeah right - just like the 3 cents a litre discount on fuel bullcrap. Everyone & that means everyone, who bought anything at either Coles or Woolworths, "paid" for the discount fuel many times over.
Bushie Bill
29/05/2013 3:05:48 PM

If Colesworth had been ripping off the Australian consumers to anywhere near where the great agrarian unwashed believe, there would have been a streams of foreign companies lining up for part of the action. The fact that many have looked and turned away is clear evidence that so-called excessive margins are a pure figment of the RARA disenchanted and their susceptibility to misinformation. You can always get a good rumour going down at the front bar of the pub.
Inverell
29/05/2013 6:06:05 PM

I am sure they can reduce the price of beef. It’s the same price all the time i.e. high. What about the fact prime cattle prices have fallen, I haven't noticed any corresponding falls in the price of steak or mince.
Dirty Redneck
30/05/2013 6:11:04 AM

Where do you do your shopping Boof, at the local pet shop?
qlander
30/05/2013 6:29:02 AM

All Australian retail outlets run standard ‘cost plus’ operations. The costs are everywhere from staff salaries, to taxes on fuel, power, and transport. This is what the foreign companies turn away from. By law they can’t control cost by reducing staff salaries, and there is a lot of political pressure not to reduce staff numbers. So while the cost of the raw material is relatively small, it’s by far the easiest way to make any inroads in costs. In short they screw the farmers because they can, and with compulsory voting the farmers don’t have enough political clout to do anything about it.

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