Life Eat & Drink Coles is cheaper than Woolies

Coles is cheaper than Woolies

Malcolm Knox says Coles and Safeway have exploited their market powers.
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Macquarie analysts say Coles is cheaper than Woolworths for Australian grocery shoppers.

After updating its index of everyday requirements and price index of a basket of more than 100 products, Macquarie announced Coles is currently providing on average better value for customers.

This was particularly true for “fresh” foods such as fruit, vegetable, meat and dairy.

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“This is consistent with Coles’ highlighted strategy of ‘Fresh’ being a primary focus given the category’s higher return on investment and has helped underpin sales and earnings growth outperformance of Coles over Woolworths,” Macquarie said in a report.

Coles is ending the year on top. Photo: Getty
Coles is ending the year on top. Photo: Getty

“In recent weeks, Coles in-store prices have tracked to a high of 3.5 per cent cheaper than Woolworths on a weighted basis.”

For the week ending November 27, Macquarie said Coles had been on average 1.5 per cent cheaper for shoppers.

In light of the price differential, Macquarie said Wesfarmers was their suggested stock of choice between the supermarket giants.

“While risk remains of a rebasing in supermarket prices with the appointment of a new Woolworths CEO expected in CY16; this outcome remains uncertain,” the company said.

December ends a bitterly competitive year for supermarket chains, in which Woolworths managed to overtake Coles briefly in October, according to a Morgan Stanley report.

But later in October, Woolworths Chairman Gordon Cairns warned second-half profits could fall by up to 35 per cent.

The bad news for Woolworths comes after discount supermarket chain Aldi’s Australian market share rose to 11.6 per cent in the middle of this year.

At this rate, Morgan Stanley predicts in five years Aldi will be half the size of the historically dominant Woolworths and Coles.

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