Coles' promotion could trigger price drops at Woolworths and IGA: 'Incredible response'
Fierce competition between Coles and Woolworths is likely to see continued promotions to win over shoppers struggling with the increased cost of groceries, a consumer expert predicts.
Food inflation spiked 8.3 per cent at Woolworths and 8 per cent at Coles, for the July-to-September quarter last year. For the previous quarter, it hit 5.6 per cent for Woolworths and 5.5 for Coles, research from investment bank UBS showed.
Price freezing tactics implemented by both supermarkets in recent months has eased some of the pain being felt by shoppers amid increased costs of living. Woolworths ceased its six-month promotion at the end of 2022 but Coles has now extended its Dropped & Locked program which was scheduled to end on January 31.
The promotion was launched in August and saw over a thousand items including meat, eggs, bread and pasta protected from price rises. It "received an incredible response" since it launched last year, a Coles spokesperson told Yahoo News Australia on Wednesday.
"With the cost of living pressures, customers know they can rely on these locked prices at Coles each time they go shopping to help plan and manage their budgets," the spokesperson said. "Dropped & Locked will continue beyond 31 January when the first phase of the promotion was scheduled to end. The supermarket said further details, including a new end date, will be provided soon.
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Coles' move a good thing for Aussie consumers
The price freeze extension could see competitors, including Woolworths and IGA, reinstate another round of rollback or discounts of their own, consumer expert Professor Gary Mortimer told Yahoo News.
"We have a highly competitive food and grocery market here in Australia," he said. "I think as we move into 2023 consumers will become more cognisant and aware of food and grocery prices. That’s going to encourage all four supermarkets to compete heavily on prices and promotion".
Woolworths responds to Coles' backflip
Woolworths confirmed to Yahoo it will not extend its price freeze program, but has already launched new discounts for shoppers. The 'Prices Dropped for Summer' campaign sees the cost of more than 300 different products reduced.
"We know cost-of-living pressures are being felt by Australian families, and throughout 2023 we will continue to work hard to help them save each time they shop with us," a spokesperson told Yahoo news Australia.
"While the Price Freeze program has come to an end, we remain focussed on maximising value for our customers, and many of the products from the program currently remain at the same low price."
IGA has also been contacted by Yahoo News for comment.
Promotions ending may 'encourage panic buying'
Dropped and locked price tags in Coles stores reminded customers the promotion was ending on January 31, and whenever it does now end may be a trigger for some panic buying. Prof Mortimer said that while supermarkets are required to inform customers of a promotion end date, these dockets could be worrying.
"It creates demand and people don’t want to miss out on a saving. I think it might encourage panic buying," he told Yahoo.
"It’s not unreasonable to think you might buy an extra pack of toilet paper or an extra bottle of detergent to maximise the savings, but I don’t think it would create the type of phenomenon we saw during Covid."
More discounts will likely be on the cards for Aussie shoppers as supermarket promotions tend to be cyclical, Prof Mortimer explained.
"As this one comes to an end, another bank of rollbacks or discounts will take place and those categories would be themed around back-to-school or summer lines," he said. "Then when that comes to an end we will move into winter lines, so soups and those types of products".
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