Following Cole’s decision to discount prices on more products, some retail body associations have shown their support for it while it’s being dismissed by others.
According to Australian National Retailers Association (ANRA) CEO Margy Osmond, supermarkets respond to consumer demand on price.
“Australian supermarkets are continuing to lower prices on a range of goods across their stores in response to demand from consumers on price,” she said.
“Australians are managing a number of hits on their household budgets with increasing utility costs, they are not prepared to spend unless prices are low and that’s what supermarkets are offering.
“Supermarkets are in tune with consumer demand, they receive instant feedback from consumers about what they want to buy just from looking at average spend across the store, and that’s what they will stock.
On the other hand, Australian Food and Grocery Council (AFGC) believes this type of aggressive tactic will see consumers rapidly lose choice as supermarkets shrink their overall product range and promote more of their home brand products.
Australian Food and Grocery Council CEO Gary Dawson said research released by Coles has revealed the extent of the fall in product choices on offer to consumers.
The research, conducted by Deloitte Access Economics, found that based on Coles own data, the supermarket’s product range has dropped by 11 per cent, from 62,000 products to 55,000, from mid-2010 to mid-2012.
“A loss of 7,000 products from a supermarket’s overall offering is a significant reduction in the range of choices available to consumers,” Dawson said.
“These figures confirm what shoppers report anecdotally – that they often can’t find their favourite products on the shelves any more when they go to the major supermarkets
“The latest aggressive campaign by Coles to promote their private label products is a sign that this trend will continue.
“This is a classic Trojan horse tactic – disguising a longer run loss of choice for consumers. And as the range of choices drops, so does competition, raising the risk that in the longer run supermarkets will have more market power to increase prices at will to protect already high profits.”
But at the end of the day, Osmond highlights these price cuts have been made with the customer in mind.
“In the end run supermarkets are in business, if they do not respond to what consumers want they will fail. Consumers have consistently asked for high quality goods at affordable prices – and that’s what Australian supermarkets have in-store,” she said.