Shoppers are paying less, but at what cost?

Home > News > Shoppers are paying less, but at what cost?

Shoppers are paying less, but at what cost?

An average grocery basket dropped from $177 in 2015 to $168 in 2016.

The report said the drop in prices was likely driven by Aldi’s move into WA in 2016.

Aldi’s WA managing director Anna McGrath said the company was proud to be a driver of greater competition.

“We’re pleased to see the correlation between price deflation in WA and the presence of Aldi stores,” she said.

“We know that West Australians are eager for an alternative place to shop.”

Aldi has opened 35 of the 70 stores planned as part of its expansion into WA.

The report also noted the impact larger supermarkets were having on smaller players.

It comes as the owners of the beloved Sisters IGA in Joondalup announced they would be forced to close doors, pointing the finger at “relentless discounting” by larger supermarkets.

Owners Cate and Pete Brodie said on their website market conditions in WA had made their store untenable.

“We have been working hard with our business partners to try and reach a solution that would see the store continuing to trade,” they said.

“But the lack of support for the independent model (outside of our loyal customer base) and the relentless discounting by the chains has made us decide to close.”

Loading

The Bankwest report said the number of Australian grocery companies was expected to shrink by 1.4 per cent in the five years to June 2022, while establishments will rise by 1 per cent.

It said in the face of strong competition smaller supermarkets would need to “rethink their value proposition and focus on niche customer segments by offering highly specialised products”.

Curtin University school of marketing lecturer Billy Sung said the “Aldi effect” was real.

Mr Sung said increased competition was pushing down grocery prices and price was the biggest factor in where cost-conscious shoppers spent their money.

With other major shopping chains like Costco signalling their intention to set up shop in WA, Mr Sung said shoppers could expect the price drop to continue.

“There will be more downward pressure on prices once these supermarkets expand into WA,” he said.

Hamish Hastie

Hamish is a reporter writing for WAtoday in Perth.

Morning & Afternoon Newsletter

Delivered Mon–Fri.

Source link