Source : THE AGE NEWS
Woolworths customers are paying slightly less for long-life pantry, cooking, freezer and snack items as the supermarket giant has cut prices to keep customers in the grocery price war, with home brand products remaining popular in the cost-of-living crisis.
Australia’s biggest grocery chain said it had lowered prices on 340 items by an average of 1.2 per cent in the 13 weeks up to April 6, during which its supermarket sales grew by 3.4 per cent.
Woolworths is hoping to convince customers it is good value.Credit: Louie Douvis
The latest quarter “marks the fifth quarter of flat or lower average prices for customers,” Woolworths chief executive Amanda Bardwell told reporters on Thursday morning. However, fruit and vegetable prices had continued to rise modestly as abundant supply had made them cheaper in the prior year, she said.
This contrasts with Coles over the same period; the supermarket rival on Wednesday reported falling prices for fresh produce such as broccoli, cauliflower, cabbage and tomatoes.
“Overall our prices are competitive against our main competitors, but there is ongoing work we need to do around price trust and relative value,” Bardwell said.
Shareholders appeared pleased with the update, sending Woolworths’ share price 0.7 per cent higher in lunchtime trading.
While Woolworths is the larger supermarket, Coles has outperformed Woolies over the past year as the grocery giants compete fiercely to win the dollars and trust of customers willing to shop around to find the best deals. Coles notched 3.7 per cent sales growth over the same quarter.
“We continue to favour Coles’ value positioning and execution over Woolworths,” said Citi analyst Adrian Lemme in a note to investors.
“Woolworths [is] likely continuing to cede [market] share, particularly in Victoria,” said JP Morgan analyst Bryan Raymond in a separate note.
Woolworths CEO Amanda Bardwell.
In the lead-up to Easter, Woolworths sold 70 million hot cross buns, with strong take-up of more indulgent options, including its “Cinnabon bakery-inspired” buns.
Bardwell said customers are looking for big discounts in the “40 per cent plus range”, with promotions continuing to drive sales.
Woolworths’ own-brand sales rose 5.7 per cent, and ecommerce sales lifted 16.3 per cent.
Big W’s sales fell 1.5 per cent, and the discount department store continues to be a thorn in the side of the Woolworths group, with its performance consistently lagging Kmart. The Woolworths group is conducting a portfolio review of all of its businesses, including exploring the option of selling Big W.
“It is a disappointing result. It’s not an acceptable position for us to have,” Bardwell said of the department store. “It is around clothing in particular that is the biggest concern for us.”
She declined to provide further details about the $400 million cost-cuts announced in late February that will result in some redundancies and a “very targeted reduction” of products in some categories.
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