Sue Mitchell
July 12, 2017
AFR
Woolworths has moved quickly to match or undercut its major rival on bread and baked goods after Coles cut prices of about 30 products by as much as 35 per cent.
Coles’ price reductions, which are jointly funded by the retailer and suppliers, are aimed at boosting Coles’ credentials and price leadership in fresh food, a key area of focus for managing director John Durkan.
Mr Durkan has stepped up pressure on suppliers to reduce wholesale prices or to absorb rising input costs so it can pass savings on to consumers by “permanently” reducing shelf prices.
Coles is also boosting sales of fresh-baked bread in supermarkets to provide cheaper options for consumers than branded packaged bread, such as Goodman Fielder’s Wonder White, Helga’s, Molenberg and Lawson’s labels and George Weston’s Tip Top, Burgen and Abbotts brands.
“I want Coles to be famous for its fresh bread and we’ve plans in place to convert an additional 180 stores to scratch bakeries, in the short to medium-term, as we work towards offering fresh-baked bread in every single store,” Mr Durkan told investors last month during Wesfarmers’ annual strategy day.
On Wednesday Coles said it would reduce the price of Coles branded bread (600 grams to 680 grams) by 5 per cent from $1.90 to $1.80, compared with $1.90 for an equivalent Woolworths’ loaf.
The cost of a six-pack of Coles bread rolls will fall 10 per cent from $2 to $1.80, compared with prices ranging from $1.50 to $2.50 at Woolworths.
Coles also dropped the price of Coles-brand banana bread by 9 per cent to $5, compared with $4.50 at Woolworths.
The biggest of the 30-odd price reductions are on a range of Tip Top fruit-bread varieties, which have been cut by between 32 per cent and 35 per cent to between $3.50 and $4.00 – well below Woolworths’ current shelf prices of $5.40 to $5.90.
Coles’ move triggered a quick response from Woolworths, which said that from Thursday it would cut the price of Tip Top Raisin Toast from $5.40 to $3.50, Woolworths bakery bread from $1.90 to $1.80 and larger bakery bread rolls (6 pack) to two packs for $3.60.
Coles general manager of bakery, Jon Haggett, said Coles was continually looking at ways to help customers stretch their grocery budget.
“We know bread is a household staple and always on the shopping list, so we’re working hard to lower the price of bread because we know every bit of savings counts at the checkout,” he said.
According to Roy Morgan research, Australian consumers spend an average $8.20 each a week on bread.
Despite a proliferation of specialty bakers, supermarkets accounted for 67.7 per cent of bread sales in 2016, up from 66 per cent in 2015.
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