The supermarket wars have stepped up a notch as Coles continued its run of strong results and Woolworths turned a corner, showing real signs of bringing back the fight to its major competitor.
For the first time in years, the two grocery giants are in a genuine performance battle.
Price is the primary ammunition of choice, but it is one that can backfire. It carries some risks for profit margins, but has incredible appeal for cost-conscious shoppers.
It’s psychological warfare for the supermarkets, who need to be seen as offering better value to customers – and this goes to the dark arts of how they curate their promotions, and why everyday items are regularly a focus.
After years of being beaten up by politicians and targeted by the consumer watchdog, the grocers won’t be winning any popularity contests – measured by trust, they both rank among the bottom 10 brands in the country – but engaging in discounting one-upmanship is a good start.
On Wednesday, after revealing an 18 per cent boost in 2026 profit, Woolworths crowed about reducing prices on more items, with now 1035 products in its stores being sold at what it calls “lower shelf prices”. Supermarket prices have deflated over the past four financial quarters, it said.
Woolies boss Amanda Bardwell says the company has invested more than $100 million in price – which in layman’s terms equates to making its products $100 million less expensive to boost sales.
Coles doesn’t put a dollar figure on its efforts to lower prices, but says it kept prices on more than 320 popular items steady during winter, worked with suppliers to offer discounts on 375 product brands, and boosted its 123 Coles Own Brand of cheaper home products across key categories.
Both companies claim that their supermarket chains gained market share, which suggests they are clawing business back from the likes of Aldi, Amazon, or even Chemist Warehouse and Bunnings.
And the price war is there to stay in perpetuity, with Bardwell declaring that shoppers’ price sensitivity over the past three years has become firmly entrenched.
Shoppers must be sitting in the stands, cheering on both supermarket contestants as they battle it out in their price war.
That said, the strong sales and profits reported by the supermarket giants this week are helped by the fact that customers are choosing to eat in during the cost-of-living crunch, rather than taking the more expensive option of eating out.
And while Woolworths’ famously popular Ooshies collectible campaign has provided additional momentum to its sales in the months of July and August, there is clear evidence that the company’s discounting efforts had already begun to gain traction with customers.
The Ooshies have put a dent in Coles’ revenue in July and August, providing a short-term sugar hit for Woolworths, but there was no real evidence of a sustained setback for the second-biggest supermarket operator.
As one seasoned industry boss once quipped, supermarket customers are a promiscuous bunch – loyal to the cheapest price first, with convenience and range running a distant second and third. The supermarkets have acknowledged this promiscuity, and call it cross-shopping.
Most cost-conscious shoppers will be members of both Woolworths and Coles’ loyalty programs.
The battle is as fierce as it has ever been as the supermarket giants pull every lever available to gain market share.
Online shopping has become another battleground as shoppers lean into convenience, delivering both supermarket chains a sizeable rise in online sales.
Having ramped up its distribution centres, Woolworths said almost half of all online delivery orders in its fourth quarter were delivered in less than two hours, at an extra delivery fee.
It seems that, strangely among us price-obsessed grocery buyers, many are still happy to trade some of that value for speed and convenience.
But in general, shoppers must be sitting in the stands, cheering on both supermarket contestants as they battle it out in their price war.
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