According to a new Deutsche Bank research, Australian supermarket giants Coles and Woolworths have both slashed private-label prices to drive sales and push more customers towards their home-brand product. In the three-month period ended in September, Woolworth and Coles cut their private-label range, respectively, by 9 and 7 percent.
The major supermarkets are determined to maintain their world-leading margins, even if that means putting pressure on suppliers. In fact, producers are struggling with the rise of unbranded groceries across an increasing number of categories, and the concentration of supermarket ownership in Australia definitely amplified the role of private labels.
Since February, Woolworths invested more than $250 million in reducing prices, trying to match Coles’. Deutsche’s research shows that the price gap is narrowing, even though, as retail analyst Steve Kulmar underlined, Coles is still perceived as cheaper than its competitor.