Woolies lures back consumers
It shows grocery discounting has lured shoppers back to the supermarket giant, despite its rivalry with Coles, according to AAP.
As a strategy, Woolies has expanded its low-cost private-label product range to lure its consumers. But it has affected one of the leading soft drinks brands, Coca-Cola, as the supermarket giant rejected stocking some of their products such as Coca-Cola No Sugar and Mount Franklin.
“Woolworths has divested underperforming assets, such as its hardware operations, to concentrate on offering low supermarket prices to consumers,” said Nathan Cloutman, IBISWorld senior industry analyst.
“Australian consumers are becoming increasingly price conscious, particularly as discretionary income growth remains pinched, and an increasingly competitive supermarket industry is responding accordingly to these pressures.
“Rising price competition from Woolworths and the ongoing expansion of ALDI and Costco across the country have put pressure on Coles over the past year, with the company losing market share as a result.”
According to AAP, Woolies has bounced back from losing $1.23 billion in 2016, compared to the supermarket food sales which has risen to 6.4 per cent in the fourth quarter. It has beaten its leading competitor, Coles, during the third consecutive quarter. Wesfarmers’ grocer has posted a revenue decline of 0.1% over 2017-18. Coles’ comparable sales growth is also much lower than 2016-17, at 1%.
Woolies also invested heavily on consumer data analytics with the $200 million stake in the Quantium Group. According to IBISWorld, the local Supermarket industry is expected to total $108 billion in 2017-18, with Woolworths estimated to account for 34%, Coles 29%, ALDI 10% and the rest made up by smaller players such as IGA and Costco.