Woolworths shoppers are being slugged an extra 12 per cent, and Coles shoppers an extra 14 per cent for branded products such as Coke, Tim Tams and Weet-Bix compared with German discounter Aldi.
Aldi aims to be 20 to 25 per cent cheaper on a basket of groceries than Woolworths and Coles. It does so by selling almost only high-margin home-brand products and through greater labour productivity – not selling many products, and not having many staff.
More Business Videos
Woolworths' short-sightedness destroyed value
The company attempted to maintain high profit margins for short-term rewards instead of meeting the competition Coles and Aldi were throwing at them.
But as Aldi expands in Australia, it is increasing its range of branded products, which lure in customers but deliver lower profits.
A Fairfax Media study of Aldi, Woolworths and Coles supermarkets in one suburb on Friday found that Aldi sold 125 branded products.
Of these, just 36 were sold in the same size at Woolworths and Coles supermarkets nearby. The list includes big brands such as chocolate makers Nestle and Mars, lolly brand Allens, Heinz and Johnson & Johnson.
If a shopper bought all 36 items from Aldi, they would pay $113.25.
If they bought all 36 items from Woolworths, they would pay $126.67 – a hike of $13.24, or 11.85 per cent more than Aldi.
If they bought all 36 items from Coles, they would pay $129.50 – another hike of $16.25, or 14.3 per cent more than Aldi.
![As Aldi expands in Australia, it is increasing its range of branded products.](/web/20161110182655im_/http://www.theage.com.au/content/dam/images/g/s/j/6/6/w/image.related.articleLeadwide.620x349.gsf9ov.png/1478601348212.jpg)
Special prices
There were material differences depending on what was on special on Friday. In the same Melbourne suburb on the same day, there was a 30 per cent price difference on Tim Tams. In this instance Woolworths was cheaper, because Tim Tams were on special.
On essential products such as pads, Aldi was 6 per cent cheaper.
![Aldi is selling some branded products cheaper cheaper than they are sold at Coles and Woolworths.](/web/20161110182655im_/http://www.theage.com.au/content/dam/images/g/s/j/6/6/q/image.related.articleLeadwide.620x349.gsf9ov.png/1478601348212.jpg)
While Coles and Aldi were roughly in line on Devondale long life full cream milk, Woolworths was 42 per cent more expensive.
Some of the 36 common products were cheaper at Woolworths and Coles if shoppers bought more than one. For this survey, Fairfax Media used the stated price per item.
Of the 125 branded products sold by Aldi, some were not available at Woolworths or Coles, such as Heinz Nurture baby formula, Birds Eye Curly Fries and Wizz Fizz party packs.
The remainder of the branded products could be compared by weight. This showed:
- Gillette Mach 3 replacement cartridges were similar in price at the three supermarkets, at $3.30 each;
- Aldi was much cheaper for Arnotts BBQ shapes, at $1.20 per 100 grams versus $1.71 for Woolworths and Coles;
- Vegemite was cheapest per weight at Coles, at $1.25 per 100 grams, compared with $1.54 for Aldi and $1.58 for Woolworths;
- Betadine sore throat lozenges sold for 17¢ each at Aldi, compared with 28¢ each at Woolworths and Coles; and
- Cadbury Caramello block was cheapest at Woolworths because it was on special.
Regional variation
There are some regional variations in supermarket pricing: Coles does state-by-state pricing, excluding tobacco and fresh produce, while Woolworths says more than 90 per cent of its products are priced the same nationwide.
But the basket provides a guide to pricing in Australia's $90 billion-plus grocery sector, which was recently described by investment bank Morgan Stanley as "among the most consolidated in the world".
Supermarkets check their rivals' prices regularly and branded products are the most sensitive to price.
And competition has stepped up this year as Aldi flags 11 per cent growth in sales to $7 billion and Woolworths reports improved sales after spending about $1 billion in cutting prices.
Paul Foley, the ex-Aldi executive who helped Aldi set up in Australia, said Aldi trod a delicate path on branded goods.
"The brands they stock are generally those where either the quality available from private-label suppliers is inferior and not comparable, like [laundry detergent] OMO, or the marketing behind that brand is so huge that the consumer demands it, like the cola from Coke," he said.
"However the deal between the supplier and Aldi is; first Aldi will take a larger pack size, often a pack size that is exclusive to Aldi so some economy is represented here and that Aldi does not embarrass other bigger retail customers (Woolies and Coles) of the brand with its selling price.
"Inevitably this means the discount per kilogram or litre on these branded items is nowhere near the discount Aldi offers on private label items.
"This starts to reduce the Aldi unique selling point of general price advantage."
![](http://web.archive.org./web/20161110182655im_/http://www.smh.com.au/cqstatic/12z7v7/0711_Aldi_729.jpg)
Woolworths 'works hard'
Woolworths said it "works hard to ensure our customers are always getting great quality products at excellent value throughout the supermarket".
"We have reduced prices across thousands of branded items in store – and we're adding around 100 more lines a month – all of which are easily identifiable with our 'Price Dropped' and 'Low Price, Always' labelling.
"Customers can also take advantage of weekly specials and promotions, which can be found in our in-store catalogue."
A Coles spokesman criticised the survey method as not representing shopper habits.
"The survey is not reflective of an average shopping basket and doesn't include promotional specials that in many cases result in prices being significantly lower at Coles than competitors," he said.
"Coles has recorded cumulative food and liquor deflation of 7.5 per cent from [financial year] 09 to [financial year]16. Over the same period, ABS data shows overall food and non-alcoholic beverages prices in Australia rose by a cumulative 14.9 per cent."
146 comments
Comment are now closed