16 price survey

The cheapest Average price of grocery basket – retailers compared CHOICE’s Consumer Pulse Survey in Average basket* Average basket* Savings from March revealed that 75% of Australians supermarket Retailer (number of stores) (exc. specials) (inc. specials) specials (%) are concerned about their food and It seems that Coles’ “down down” and grocery expenses and they’re looking to Woolworths’ “cheap cheap” everyday low (n=18) $87.68 $87.57 $0.11 (<0.5%) cut back if they can. Savings, low prices pricing strategies are no match for Aldi’s Coles private label (n=32) $114.24 $113.75 $0.49 (<0.5%) and value for money are top priorities for lower cost bases for labour, rent and other Woolworths private label (n=32) $116.91 $118.56 $0.84 (1%) grocery shoppers according to industry general and administrative costs, as Aldi Coles leading brands (n=32) $174.97 $162.56 $12.41 (7%) reports, outranking shopping retains its crown as cheapest supermarket. Woolworths leading brand (n=32) $176.77 $172.16 $4.61 (3%) experience, inspiration and even food Our basket of leading brand products quality and freshness when it comes to cost $87.29 more at Coles and $89.09 more * Made up of 28 leading-brand products or their private label equivalents across all three chains plus three fresh food items. choosing where to shop. at Woolworths than the equivalent basket When we last looked at grocery from Aldi (excluding specials). So by were taken out by private labels from the But there’s a hidden cost. Our 2012 prices back in 2009, German discount forgoing leading brands you can save big chains. investigation found an increase in private chain Aldi won the gong for cheapest about 50% off your grocery bill at Aldi. So this year we’ve also compared label products can impact choice in the groceries. And at that time the ‘Aldi The difference between Coles and equivalent private label baskets across long run, as smaller or niche brands are effect’ (see page 18) meant that Coles and Woolworths was less distinct – just $1.80 the supermarket chains. squeezed off supermarket shelves. Woolworths shoppers paid less if there between them – reflecting the intensive Aldi had the cheapest private was an Aldi store in the vicinity. But process of price monitoring between the label basket by far, 23% and 27% Effect of specials since then, sales of private label brands duopoly. Independent supermarket chain cheaper than the equivalent Price promotions play a big part in such as Woolworths’ Macro and Select IGA returned the most expensive basket Coles and Woolies baskets luring shoppers into Coles and and Coles and Coles’ Finest – direct – $13.64, or 8%, more expensive than the respectively (excluding specials). Woolworths. Promoted products competitors to Aldi’s exclusive private same basket at Coles. Private label products from account for as much as 40% of sales label brands – have increased, growing Coles and Woolies may be at Woolworths, according to UBS 6.6% in 2014 according to global market Private label brands more expensive than Aldi’s, analysts. And certainly individual research group Nielsen, outpacing the offer big savings but they’re still cheaper than price specials and ‘3 for the price 2.4% growth in total grocery sales. Private label groceries now account their leading brand of 2’ and other multi-buy So is Aldi still the for 21% of packaged grocery sales in equivalents. For the same promotions can make a Rachel Clemons reveals which supermarket cheapest, and does , up from 13.5% in 2008. In the basket of products you substantial saving to your the ‘Aldi effect’ still past five years the reputation of private can save $60.73 (35%) weekly shop. chain has the cheapest groceries exist? Where can the label brands has improved, with many when shopping at We found minimal price cheapest groceries be people believing most private label Coles and $57.37 specials on private label ousing costs aside, the bulk according to the most recent Household found? We wrote out quality is as good as that of name brands. (33%) at Woolworths products, but shoppers at of our hard-earned cash Expenditure Survey from the Australian our shopping list and More than a quarter of categories in the just by swapping leading Coles, for example, could goes towards groceries – Bureau of Statistics in 2009–10. And food hit the industry-sponsored but consumer-voted brands for each chain’s save $12.41 (7%) on the leading H more than $200 a week prices have certainly increased since then. to find out. Product of the Year awards in February private label equivalents. brand basket as a result of specials. Aldi private label Coles private label Woolworths private label Leading brands tock $87.57 $113.75 s $118.56 $162.56

Average basket Average basket Average basket (inc. specials) (inc. specials) (inc. specials) Image:Shutter $172.16 Average basket (inc. specials) 16 /// june 2015 Choice.com.au 18 Supermarket price survey

Location, location, location Cities compared BASKET Average basket* $ (inc. specials) Where you live can also impact how much you pay at the supermarket. Our results City (number of stores, Coles Average basket* and Woolworths only) $ (inc. specials) show that generally, shoppers in the eastern states pocket the most change from PRICE BY * Made up of 28 leading their weekly shop, while those living in NT and WA are paying a premium. Canberra, ACT (n=4) $163.60 brand products and three fresh food items. Geographical price differences can be explained by a range of factors, including Dubbo, NSW (n=2) $165.26 STATE $170.25 (n) number of stores (Coles increased delivery costs to regional stores, regional differences in the size and Newcastle, NSW (n=4) $165.45 and Woolworths only). Prices include specials. characteristics of demand and differences in local competition. With Aldi planning Broken Hill, NSW (n=2) $165.96 to expand into SA and WA in the next few years, we look forward to seeing how this Hobart, Tas (n=4) $166.55 $168.53 will impact grocery prices in those locations (see The ‘Aldi effect’, below). Geelong, Vic (n=4) $166.76 How we survey Melbourne, Vic (n=6) $166.96 $169.71 NT Supermarkets and locations. We sent undercover shoppers into 93 Adelaide, SA (n=6) $167.04 (n=2) supermarkets – 32 Coles, 32 Woolworths, 18 Aldi and 11 IGA stores – in Wodonga, Vic (n=2) $167.40 17 cities across Australia. Supermarket locations were chosen to give Sydney, NSW (n=8) $167.40 Qld good coverage of socio-economic status and relative distances to Mt Gambier, SA (n=2) $167.86 (n=8) city centres within each city and state. We surveyed $167.24 Townsville, QLD (n=2) $168.47 supermarkets in clusters so that each store has local competition. Brisbane, QLD (n=6) $168.55 WA SA (n=8) (n=8) $166.81 Grocery basket items. We collected price data on Perth, WA (n=6) $169.41 NSW 31 different products. For 28 of these we priced the Albury, NSW (n=2) $169.56 (n=18) leading brands as well as their private label equivalents Darwin, NT (n=2) $170.25 at each supermarket, where available. The remaining Albany, WA (n=2) $170.62 three products were fresh, unbranded items. * Made up of 28 leading brand products and three fresh food items. Vic $163.60 2015 2009 $167.01 (n=12) g 1 ACT NSW ACT The ‘Aldi effect’ three times faster than Coles’ and market research group Roy Morgan Tas QLD Tas (n=4) A 2008 inquiry into grocery prices by the Woolworths’ sales. And while the two – Aldi has cracked the 10% figure, 2 $166.55 (n=4) Australian Competition and Consumer giants have the bulk of the $82bn moving ahead of IGA’s 9.5% share. Commission found that consumers pay grocery market share between them And a recent report from global NSW ACT less at Coles and Woolworths if there’s – 72.5% according to analysis from banking giant Morgan Stanley says 3 an Aldi store nearby. Coined the ‘Aldi that Aldi – with its 350 stores – has effect’, the inquiry reported Coles just reached “critical mass” in ankin Vic Vic customers paying, on average, five Australia, making it a viable alternative 4 percent less for comparable private to the duopoly, which is great news label items if they shopped at a store for consumers. 5 SA SA CHOICE verdict within 1km of an Aldi. “This is the point when private label For the biggest savings, Our current survey results found scale is achieved, which is critical for and in the absence of a the differences in basket price discounters’ buying terms,” the 6 QLD NT nearby Aldi, shopping between stores with or without Aldi authors write. around for specials and nearby was negligible. Regardless, “The Aldi format works best when choosing private label the impact of Aldi on the Australian there is a 20%-plus differential in tock s 7 WA WA over leading brands can supermarket landscape is forecast pricing to national brands at the full- make a significant to get even stronger. In 2014, Aldi’s line supermarkets. At this point difference to your Australian sales reportedly reached consumers are prepared to trade off 8 NT Tas grocery bills. Image:Shutter

$6bn, growing 13% in the year – nearly choice for price.” R STATE

18 /// june 2015 Choice.com.au CHOICE.COM.AU june 2015 /// 19