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Supermarket bread wars

On Thursday 18 September, Woolworths announced it had dropped the price of its Homebrand white to 85¢ per loaf. The following day Coles followed suit with its Smart Buy white bread and ALDI lowered its price on Saturday. Canberra-based Independent supermarket, Supabarn, has since entered the fray, pricing its bread at 80¢ a loaf.

According to Angus Kidman writing on lifehacker.com.au, “For many years, Australia’s supermarkets tacitly agreed that the cheapest loaf of bread for sale would be a 650 gram white loaf for $1. Now Woolworths and Coles have decided that’s apparently too expensive, and are selling that same white loaf for 85 cents.”

Woolworths claims the move is in response to customer demand for value on everyday staples. However as Tom Godfrey, head of media at Choice pointed out, “Price is one thing but you’ve also got to look at quality of the products”.

In the wake of this round of price cutting, Independent Senator for South Australia, Nick Xenophon, warned that “Woolworths’ latest discounting gimmick of 85c loaves of bread might seem appealing to consumers, but in the long run it will cripple independent supermarkets who can’t access bread at that price from suppliers”.

Pointing out that “When independents are pushed out of business that hurts competition and consumers too,” Senator Xenophon said that the 1995 repeal of Section 49(1) of the Trade Practices Act was a “big mistake” and called for a level playing field.

“In the 19 years since the abolition of laws against anti-competitive price discrimination Woolies and Coles have grown significantly and to the detriment of the independent grocery sector,” he said. Senator Xenophon will release a draft of the proposed reform early next month with a view to introducing the legislation into the Senate in November.

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