Down even further: Coles slashes prices

JOHN ROLFE
January 09, 2013
News Limited Network

From today, the “Down Down” campaign will be expanded by more than 100 products.

The price cuts range from an 8 per cent reduction on bread and 13 per cent on juice to 27 per cent on meat pies and 32 per cent on vegetable oil.

The discounts are only guaranteed for six months. That said, products added to Down Down in July last year – including some lamb cuts and shredded cheese – are to remain at sale prices.

The average discount among Down Down products is 8 per cent, according to Deloitte Access Economics.

That has helped to reduce Coles’s prices store-wide by an average of 3.2 per cent in the year to the end of September. Coles has reported deflation in 12 of the last 13 quarters.

Earlier this week News Limited revealed Australia had the fastest-falling food prices in the world during the year through September and that since 2009, local food bills had been contained when compared to other similar countries.

Still, many readers commented that they did not think food had become cheaper in recent times.

Coles merchandise director John Durkan said that Australians had experienced big price increases up until 2009. But now the market was more competitive.

“I can only see prices going in one direction, and that’s down,” Mr Durkan said.

Amid signs Aussie shoppers’ have had enough of home brand, the new mark downs have been applied to private-label products only.

More than 1000 products are now part of Down Down. Previously branded items such as Weet-bix and Quilton toilet paper were reduced.

The emphasis on private label in these reductions could help to kickstart homebrand growth.

Nielsen, which tracks consumer patterns, has found private label’s share of sales has stalled at 23.6 per cent.

It had been forecast to reach 40 per cent by 2015. Then in April last year a brand-battle broke out – Coles launched its My5 scheme offering 10 per cent discounts on five items, which Woolworths countered with its Extra Special Extra Simple Savings promotion in May, offering discounts of 20 per cent.

“Consumers switched out of a number of private label categories back to branded products where a lot of that heavy price emphasis was happening,” Nielsen executive director Kosta Conomos said yesterday.

He added that if the supermarket chains did not renew their focus on private label then its share of revenue would only reach a percentage in the “low 30s” by 2015. Private label is viewed as more profitable for supermarkets than branded groceries.