Supermarkets take price war to new arena

1Coles catalogue 1817_28The price discounting focus by the major supermarket chains appears to have moved away from fresh food and towards personal care and grocery items, with supermarket giant Coles discounting key brands such as Kleenex, Sunrice and Colgate.

With the major supermarkets competing to maintain market share and fend off competition from rivals such as Aldi, convenience stores are being drawn into the fray. Particularly as Coles has extended its ‘Every Day’ price promotions into the convenience channel through its recently expanded network of Coles Express stores.

Among the most recent round of price drops Coles has reduced Kleenex Facial Tissues 85/95 pack, from $2.50 to $2.00; Colgate Total Advanced toothpaste 100-110g now $4.00 down from $4.79; and SunRice’s 90 second rice pouch 250g now $2.50 down from $2.99.

Whether the extension of Coles ‘Every Day’ promotional pricing into its Coles Express chain will cause price pressure in the convenience channel generally remains to be seen.

However, the recent experience with both bread and milk discounting by the major supermarkets has shown that while supermarket price changes can cause some immediate concern within the convenience channel, and may require some adjustments in store, in the longer term supermarket discounting has minimal impact on the convenience channel.

Convenience store retailers need to remain mindful that shoppers will compare prices across channels and manage their offer to ensure they remain competitive.

However, competitiveness is not simply a matter of price. As Mark Borg of Solaris Paper told C&I, “It’s important for convenience stores to remain competitive and that means creating a point of difference – either through product offering or service”.

“Every store is different and needs to look at its own customers and tailor the offer to their needs; a customer is always happy to buy products that meet their needs and reflect good value,” Mr Borg said.

“Consumers are prepared to pay a premium for convenience, but with today’s highly competitive marketplace with grocery encroaching on traditional convenience sales, it is importance price strategy is effective and reflects value to your customers.”

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