Woolworths - is their Spring campaign genuine?
After a horror week in the media, Woolworths has announced it is slashing prices on more than 400 items immediately. Will this bring down the prices for How Low Can You Go?
On the 19th February Four Corners, an investigative journalism program on the ABC, aired an episode called Super Power, looking at the power Coles and Woolworths have over pricing for both what they pay suppliers and what they charge customers. The overall argument was that Australia, unlike similar countries, has two major supermarkets with too much control over the grocery industry, able to use their power to increase their profit and keep out competitors.
Both CEOs were interviewed. Brad Banducci, the CEO of Woolworths, resigned two days later. It is likely that he did this in response to his Four Corners interview which has been described by media experts and political journalists as "amateurish and unprofessional" (see Crikey article below) and "a train-wreck of an interview," (see link to Insiders).
What followed was a new CEO, Amanda Bardwell, who admits that Woolworths needs to work hard to re-establish trust in their brand. A press release yesterday announced that they have dropped prices on more than 400 items by an average of 18%.
Would this bring the price back down to where they were July 2023 for the How Low Can You Go shopping lists? I had my fingers crossed.
After all, I have been watching the prices rise on the most basic food items for months now. Simultaneously, Woolworths has announced increasing profits. Surely, given the intense political pressure they are currently under, they will take a hit. I think even their shareholders might thank them. Okay, not thank them, exactly...but would understand the necessity of doing so in this current political environment. I had high hopes.
The press release hyperlinked to 57 pages of "price dropped" specials. I looked at all 57 pages.
Will it make any difference to the How Low Can You Go? shopping lists. Not really. Only a handful of items were on our shopping lists. These were canola oil, mature tasty cheese, angel hair pasta (for the Bachelors) peanut butter and tinned peaches in juice. There were two other items that were listed but as they were out of stock, the price was not listed.
Sadly, none of these items were significantly reduced. At the most you would save about $5.00 over a five-week period.
Overwhelmingly, the items reduced were premium brands, high-end products such as salmon or rump steak; and processed or ready-made foods.
If there is an advantage given from these promotions, the shoppers who will benefit from it most, need it the least.
To be fair to Woolworths, the low-cost items may have a narrower profit margin. However, I have watched items like the Woolworths brand of spaghetti rise from $0.68 to $0.90 in the past two years. Is it simply the increased cost of supply? Or a belief that they could because the alternatives were now even more expensive?
Specials can be a drug. Even I want to believe that my brand of coffee is half price so that I can get that heady rush of spending money to save money by buying up several jars. But I keep track of prices. If you do this on the items you routinely buy, then you know when you're being duped. Prices went up in May 2023 on many of our shopping list items, then July 2023, then January saw a giant leap. At best the discounted stock takes us back to pre-January prices.
Instead of specials, stick to the principals outlined in How Low Can You Go. This is still the best way to say money while buying the broad range of nutrition recommended by the Eat For Health Australian Dietary Guidelines.
For more info on this post:
Crikey: Woolworths CEO Resigns
7News: Woolworths makes major announcement on pricing
ABC: Super Power, the cost of living with coles and woolworths
Credits:
Cover Photo: Timon Reinhard