Woolworths launches its own range of cheap nappies to compete with Coles and Aldi

Rebecca Sullivan
AUGUST 18, 2016
news.com.au
IT STARTED with milk, roast chickens, tissues and toothpaste, and now nappies are the latest grocery item to be targeted in the ongoing supermarket price wars.
Woolworths launched its own range of cheap nappies, Little Ones, last week in an attempt to lure bargain-hungry shoppers, as the battle for market share in the $90 billion supermarket industry heats up.
The Little Ones range is significantly cheaper than Huggies, the market leader.
Bulk packs of 30 to 56 Little Ones nappies cost between $4.65 and $11, while convenience 24 packs are $8. Woolworths sells Huggies 24 packs for $9.99 and 54 packs for $16. A 26 pack of Huggies Junior Nappies costs $20.
Like milk and bread, nappies are staple items most families have to purchase weekly, taking up a considerable portion of the grocery budget.
The total Australian nappy market is worth $654 million, according to Euromonitor, and children aged 0-36 months used 1053 nappies per capita in 2015.
Kimberly Clark, which owns Huggies, has a 57.2 per cent market share, followed by Unicharm, owner of BabyLove, at 10.6 per cent, Aldi at 9.7 per cent, Wesfarmers, owner of Coles, at 6.1 per cent and Woolworths, 3.3 per cent.
The Woolies share of the markets comes from the supermarket giant’s existing Home Brand range.
“Kids are in nappies for a number of years and it’s not something that people love spending money on. What customers are starting to realise is you don’t have to pay $25-$35 to get a good quality nappy,” Woolworths head of buying Steve Donohue told news.com.au.
“Our buying power helps us take advantage of economies of scale, so we can pass those savings onto our customers.
“We’ve had to scramble to make sure we have enough stock in our store because the number of repeat purchases has surprised us. People have bought them once and bought them again, and that’s the big test.”
The Little Ones range was introduced to compete with the other in-house nappy ranges from Coles and Aldi.
Coles’ Comfy Bots nappies cost $6 for a newborn 36-pack and $11 for a 56-pack. Aldi’s Mamia nappy range costs $4.29 for a 28-pack and $10.99 for a 56-pack.
Slashing the price of staple grocery items to get customers through the door is a common tactic used by the supermarkets, says retail analyst and director of DGC Advisory Geoff Dart.
“They always pick big staple products like nappies, breakfast cereals, bread and milk, because they’re good for the customer,” Mr Dart told news.com.au.
Aldi’s Mamia range is becoming increasingly popular. Mamia recorded retail volume growth of 30 per cent in 2015 and ranked second overall in the category in retail volume sales terms, according to a June Euromonitor report.
Mr Dart says Aldi’s success proves consumers are more focused on price, rather than the prestige of buying a more high end brand.
“It’s a wake-up call to other brands who are charging premium prices for products aren’t always that different,” he said.
“Most of [Aldi’s] brands for sale are house brands and if you look at Europe and the US, retailers have worked out that you can’t rely on brand names.
“Five years ago you would have said ‘You have to have Huggies’, but now you don’t. There are alternatives around and people are more price-conscious, as the economy has slowed and there are concerns about jobs and unemployment.”
Woolworths, while still the nation’s largest supermarket, has struggled with sliding sales and profits over the past five years as it bleeds market share to Coles and Aldi.
Price cuts across a range of items helped lift Coles’ comparable food and liquor sales by 4.9 per cent during the third quarter of the financial year, while Woolworths’ food and liquor sales declined 0.9 per cent.
Wesfarmers is due to report its full-year results next Wednesday, with Woolworths slated for the following day.
rebecca.sullivan@news.com.au