Woolworths sales fall behind Coles as price battle rages on

Woolworths customers are paying slightly less for long-life pantry, cooking, freezer and snack items as the supermarket giant has cut prices to keep customers in the grocery price, with home brand products remaining popular in the cost-of-living crisis.

Australia’s biggest grocery chain said it has lowered prices on 340 items by an average of 1.2 per cent in the 13 weeks up to April 6, during which its supermarket sales grew by 3.4 per cent.

The latest quarter “marks the fifth quarter of flat or lower average prices for customers,” Woolworths chief executive Amanda Bardwell told reporters on Thursday morning. However, fruit and vegetable prices had continued to rise modestly as abundant supply had made them cheaper in the prior year, she said.

This contrasts with Coles over the same period; the supermarket rival on Wednesday reported falling prices for fresh produce such as broccoli, cauliflower, cabbage and tomatoes.

“Overall our prices are competitive against our main competitors, but there is ongoing work we need to do around price trust and relative value,” Bardwell said.

Shareholders appeared pleased with the update, sending Woolworths’ share price 0.7 per cent higher in lunchtime trading.

While Woolworths is the larger supermarket, Coles has outperformed Woolies over the past year as the grocery giants compete fiercely to win the dollars and trust of customers willing to shop around to find the best deals. Coles notched 3.7 per cent sales growth over the same quarter.

“We continue to favour Coles’ value positioning and execution over Woolworths,” said Citi analyst Adrian Lemme in a note to investors.

“Woolworths [is] likely continuing to cede [market] share, particularly in Victoria,” said JP Morgan analyst Bryan Raymond in a separate note.