Aldi drops its own price bomb in supermarkets' targeted price attacks
Aldi has joined the Australian supermarket tit-for-tat price contest begun by major players Coles and Woolworths to ensure its discount gap stays in place.
The German multinational chain has lowered prices by about 1 per cent to ensure its discount bona fides in response to the premium supermarket chains' recent price bombs.
The price drop is Aldi's largest in 18 months, according to JP Morgan's price tracking analysis.
What we are seeing is a precision strike on prices of select and mainly home brands from Coles and Woolworths rather than store-wide discounts.
Sure, supermarkets want to help customers ease cost of living stress, but a series of selective price cuts has more to do with luring those large-trolley shoppers into their stores with, let's say, cheaper nappies, and having them throw in items that are not discounted.
Woolworths fired the first salvo last month in a $100 million land-grab. Coles' response of matching Woolworths was almost immediate, which brings into question the effectiveness of Woolworths' move.
Supermarket shoppers are a promiscuous bunch and are even less loyal because times are tough.
'There is no material-sustained price advantage for Woolworths after investing $100 million into private-label pricing in May, given the quick responses from Aldi and Coles,' JP Morgan analyst Bryan Raymond said.
'It is more about getting value perception back with shoppers, and encouraging branded suppliers of products to invest along with Woolworths to help drive better value for consumers in both home brand and popular branded products.'
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