Grocery sales growth slows as Woolworths, Coles cut prices

Date
    August 5, 2015 


The battle for market share between the major grocery chains and independent retailers has led to the weakest supermarket sales growth in almost two years.

While overall retail sales growth exceeded market forecasts in June, delivering a long-awaited shot in the arm to traders, food sales growth was weaker than expected due to intensifying price competition between Woolworths, Coles and independent retailers.

Supermarket and grocery store sales rose just 2.9 per cent - the weakest rate of growth since September 2013 and well below the six month trend - as Woolworths, Coles and independents supplied by Metcash cut prices to regain market share lost to Aldi.   :)


"Woolworths invested in price and Coles is doing a bit of the same and people are shopping more at Aldi – that's my sense of it," says Morgan Stanley's Tom Kierath.   :)

Overall food and liquor sales grew by 2.7 per cent, compared with growth of  3.4 per cent in May and the 12-month average of 4.8 per cent.

"It's hard to read too much into it  but you're starting to see signs that supermarkets are going a bit harder on price," said Morgan Stanley analyst Tom Kierath​.
Pressure on margins


Woolworths lost market share in June despite cutting grocery prices.

Food price inflation is estimated to have slowed to 1.3 per cent in the June quarter, compared with 2.5 per cent in the fourth quarter 2014, increasing the pressure on supermarket margins.

The June Australian Bureau of Statistics figures show that cutting grocery prices is a zero sum game – consumers do not necessarily buy more packaged food and groceries when prices fall and growth in volumes barely offsets lower prices.

"The deterioration in food sales suggests market growth has been affected by the price investments made by Woolworths and Coles, and volume uplift has been insufficient to offset this,"  said Deutsche Bank analyst Michael Simotas.

Analysts believe Woolworths continued to lose market share in food and groceries in June even after the retailer stepped up discounting for branded and private label groceries and trimmed online prices to lure customers back to stores.

Cutting profit guidance in mid-June, for the second time in four months, Woolworths said Australian food and liquor sales had fallen 0.7 per cent on a same-store basis in the quarter to date. Analysts said there was unlikely to have been a change in momentum in the last two weeks of the month.

Coles "held up OK," according to Deutsche Bank, and sales at independent retailers improved slightly as a price-matching program at IGA stores gained momentum.
Aldi the drawcard



While promotional discounts are deeper than they were last year, analysts say pricing remains rational and there are no signs of an all-out price war.

Woolworths announced plans in May to slash costs by more than $500 million and pour the savings into lowering grocery prices and improving service in supermarkets to "neutralise" Coles, which has been outperforming its larger rival for 23 consecutive quarters, and to "contain" Aldi.

​Analysts and investors are hoping to see Woolworths supermarkets return to same-store sales growth over the next few quarters. However, UBS analyst Ben Gilbert believes it could take two years for Woolworths to return to a defendable, like-for-like sales growth trajectory.

Read more: http://www.smh.com.au/business/grocery-sales-growth-slows-as-woolworths-coles-cut-prices-20150804-gir5by.html#ixzz3huPRtojt

    At Aldi you buy what you want and get the cheapest price.

    At Coles you have to buy TWO of the same item to get the cheapest price.

    I don't need two, it is utterly annoying and therefor I shop at Aldi.   :)

Commenter
    Ulukila
Date and time
    August 05, 2015, 10:43AM

Please open more Aldi supermarkets.   [smiley=thumbsup.gif] 

wrote on Aug 5^th, 2015 at 2:06pm:

Please open more Aldi supermarkets.   [smiley=thumbsup.gif]

Once more, on cue, the pro-foreign ownership of Australian food distribution networks lobby - posts another Aldi advertorial as soon as the previous one is killed off


Very_Vinnie wrote on Jul 31^st, 2015 at 4:36pm:

greggerypeccary wrote on Jul 30th, 2015 at 9:34am: longweekend58 wrote on Jul 30th, 2015 at 9:28am: wrote on Jul 30th, 2015 at 9:19am: Please open more Aldi supermarkets.      [smiley=thumbsup.gif]  please send more money to Germany! fool What's wrong with Germany having money? Don't you want the Germans to travel, for example? Australian Tourism: "There was $0.910 billion in total expenditure from Germany in 2010. The Tourism Industry Potential estimates that Germany has the potential to grow to between $1.902 billion and $2.316 billion in total expenditure by 2020." http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3401.0Feature%20Article1Dec%202010?opendocument&tabname=Summary&prodno=3401.0&issue=Dec%202010&num=&view= http://www.tourism.australia.com/documents/ABSarrivalsApr2015.pdf Profits from Aldi do NOT go to "Germans" - aside from immediate members of Germany's wealthiest family NO-one outside of this family owns (or can own) Aldi shares Aldi is NOT listed on any stock exchange Unlike the Australian owned Coles and Woolworths - where ANY Australian can become shareholders, including Australia's many superannuation funds The VAST bulk of Coles and Woolworths flows back to ordinary, everyday Australians - through one channel or another

Even as a pensioner, I'm not prepared to sell out Australia - and make Germany's richest family just that little bit richer - in order to "save" fifty cents on a packet of biscuits

It is this "me, me, me" attitude that has killed off SO much Australian owned industry - to the loss of SO many Australian jobs

Why pay six dollars for an Australian made pair of socks - from an Australian owned company - when you can get a Chinese, 100% import, for five dollars ?

Dick Smith is 100% SPOT ON

Australians CLAIM to support Australian companies and jobs - but when it comes to the crunch they'll always opt for the CHEAPEST, no matter WHAT the bigger picture and longer term consequence

Buying groceries from Coles or Woolworths is no more buying Australian than buying iron ore from Rio or BHP is.

In terms of ultimate beneficial ownership, Coles (Wesfarmers) & Woolworths are as much owned by US, Canadian, UK, German, Asian &etc shareholders as they are by Australians.

bogarde73 wrote on Aug 6^th, 2015 at 10:51am:

Buying groceries from Coles or Woolworths is no more buying Australian than buying iron ore from Rio or BHP is. In terms of ultimate beneficial ownership, Coles (Wesfarmers) & Woolworths are as much owned by US, Canadian, UK, German, Asian &etc shareholders as they are by Australians.

Correct!

BTW Aldi have nice towels on sale this week. I bought some yesterday.

Very_Vinnie wrote on Aug 5^th, 2015 at 4:01pm:

wrote on Aug 5th, 2015 at 2:06pm: Please open more Aldi supermarkets.   [smiley=thumbsup.gif]  Once more, on cue, the pro-foreign ownership of Australian food distribution networks lobby - posts another Aldi advertorial as soon as the previous one is killed off Very_Vinnie wrote on Jul 31st, 2015 at 4:36pm: greggerypeccary wrote on Jul 30th, 2015 at 9:34am: longweekend58 wrote on Jul 30th, 2015 at 9:28am: wrote on Jul 30th, 2015 at 9:19am: Please open more Aldi supermarkets.      [smiley=thumbsup.gif]  please send more money to Germany! fool What's wrong with Germany having money? Don't you want the Germans to travel, for example? Australian Tourism: "There was $0.910 billion in total expenditure from Germany in 2010. The Tourism Industry Potential estimates that Germany has the potential to grow to between $1.902 billion and $2.316 billion in total expenditure by 2020." http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3401.0Feature%20Article1Dec%202010?opendocument&tabname=Summary&prodno=3401.0&issue=Dec%202010&num=&view= http://www.tourism.australia.com/documents/ABSarrivalsApr2015.pdf Profits from Aldi do NOT go to "Germans" - aside from immediate members of Germany's wealthiest family NO-one outside of this family owns (or can own) Aldi shares Aldi is NOT listed on any stock exchange Unlike the Australian owned Coles and Woolworths - where ANY Australian can become shareholders, including Australia's many superannuation funds The VAST bulk of Coles and Woolworths flows back to ordinary, everyday Australians - through one channel or another Even as a pensioner, I'm not prepared to sell out Australia - and make Germany's richest family just that little bit richer - in order to "save" fifty cents on a packet of biscuits It is this "me, me, me" attitude that has killed off SO much Australian owned industry - to the loss of SO many Australian jobs Why pay six dollars for an Australian made pair of socks - from an Australian owned company - when you can get a Chinese, 100% import, for five dollars ? Dick Smith is 100% SPOT ON Australians CLAIM to support Australian companies and jobs - but when it comes to the crunch they'll always opt for the CHEAPEST, no matter WHAT the bigger picture and longer term consequence

Rubbish. It's those retailer scumbags such as harvey norman who chased cheaper products overseas whilst local manufacturers went to the wall !! They are the reason that so many aussie manufacturers no longer exist. They are greedy and want their 10,000% markups. They sell goods for $100 which they pay some local supplier $20 but then they go overseas and buy it for $10 simply because they are f.cken greedy and don't want to pay the local supplier an extra $10. Same with farm produce which is why farmers are having to close down and sell off their land to foreign investors.

And how much of what coles sells is not some foreign slop put into a can and sent here via New Zealand etc ?

And I note that dick smith always bags Aldis but not Woolies which he sold out to for his 30 pieces of silver.

Sir lastnail wrote on Aug 6^th, 2015 at 11:04am:

Very_Vinnie wrote on Aug 5th, 2015 at 4:01pm: wrote on Aug 5th, 2015 at 2:06pm: Please open more Aldi supermarkets.   [smiley=thumbsup.gif]  Once more, on cue, the pro-foreign ownership of Australian food distribution networks lobby - posts another Aldi advertorial as soon as the previous one is killed off Very_Vinnie wrote on Jul 31st, 2015 at 4:36pm: greggerypeccary wrote on Jul 30th, 2015 at 9:34am: longweekend58 wrote on Jul 30th, 2015 at 9:28am: wrote on Jul 30th, 2015 at 9:19am: Please open more Aldi supermarkets.      [smiley=thumbsup.gif]  please send more money to Germany! fool What's wrong with Germany having money? Don't you want the Germans to travel, for example? Australian Tourism: "There was $0.910 billion in total expenditure from Germany in 2010. The Tourism Industry Potential estimates that Germany has the potential to grow to between $1.902 billion and $2.316 billion in total expenditure by 2020." http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3401.0Feature%20Article1Dec%202010?opendocument&tabname=Summary&prodno=3401.0&issue=Dec%202010&num=&view= http://www.tourism.australia.com/documents/ABSarrivalsApr2015.pdf Profits from Aldi do NOT go to "Germans" - aside from immediate members of Germany's wealthiest family NO-one outside of this family owns (or can own) Aldi shares Aldi is NOT listed on any stock exchange Unlike the Australian owned Coles and Woolworths - where ANY Australian can become shareholders, including Australia's many superannuation funds The VAST bulk of Coles and Woolworths flows back to ordinary, everyday Australians - through one channel or another Even as a pensioner, I'm not prepared to sell out Australia - and make Germany's richest family just that little bit richer - in order to "save" fifty cents on a packet of biscuits It is this "me, me, me" attitude that has killed off SO much Australian owned industry - to the loss of SO many Australian jobs Why pay six dollars for an Australian made pair of socks - from an Australian owned company - when you can get a Chinese, 100% import, for five dollars ? Dick Smith is 100% SPOT ON Australians CLAIM to support Australian companies and jobs - but when it comes to the crunch they'll always opt for the CHEAPEST, no matter WHAT the bigger picture and longer term consequence ... how much of what coles sells is not some foreign slop put into a can and sent here via New Zealand etc ?

... and you don't think Aldi's "product of Australia" lines are any DIFFERENT ?


That's a pretty lame argument in support of foreign owned supermarkets



At least in our Australian share-holder owned supermarkets you are given a range of choice options on any product type

Aldi have gone on record stating that at least 80% of its products are sourced from Australia.

I haven't heard any such undertakings by Coles or Woolworths.

red baron wrote on Aug 6^th, 2015 at 5:18pm:

Aldi have gone on record stating that at least 80% of its products are sourced from Australia. I haven't heard any such undertakings by Coles or Woolworths.

I assume this figure carries the disclaimer "confectionary excluded" ?
Have you bought a chocolate bar from Aldi - marked "Product of Australia, recently ?

https://www.aldi.com.au/en/groceries/chocolate/ 


"Product of Australia" means packaged in Australia - with over 50% Australian grown produce

I've shopped with the Australian Coles - for the most part - all my adult life
I can think of NO occasion I was not offered a range of "Product of Australia" lines - on any food type - be it a can of tomatoes or a packet of breakfast cereal


In FACT, a good bet would be that the NETT number of "Product of Australia" lines offered by Australian owned supermarkets would be HIGHER than  the NETT number of "Product of Australia" lines offered by $18.2 billionaire (personal wealth) Theo Albrecht Jr's Australian operations