Shoppers want consistently low grocery prices and not another loyalty program.
UBS retail analyst Ben Gilbert says supermarkets in the UK and Australia have discovered low prices on popular items trump loyalty programs when it comes to attracting customers.
“People have been inundated by loyalty programs with the targeted promotions and activations,” Mr Gilbert said.
“If consumers can trust that they can go into your store everyday and get the best price, that is ultimately what will drive them back again and again.”
He said Coles and Aldi have driven the shift towards everyday low prices in Australia, while Woolworths was playing catch up.
Woolworths’ new rewards program launched in October has been criticised by analysts and customers, who say it is confusing and applies to a limited range of products.
The supermarket giant has just reintroduced Qantas Frequent Flyer Points as an option after dumping it in 2015 in favour of it Woolworths Dollars, where consumers earn points off their next grocery bill when they buy selected items.
Woolworths said its own research showed shoppers want to be rewarded for their loyalty, above and beyond just low prices.
“It’s very early days and we have always said we will continue to listen to our customers and adapt the program to ensure our customers enjoy rewards on products they know and love or are likely to want to try,” a company spokesperson said.
The supermarket sector’s move towards everyday low prices is driving a deflation in food and grocery prices.
Mr Gilbert said the latest price focus was on fresh produce, particularly as Aldi moves to broaden its range of fresh fruit and vegetables.
The most notable price war in recent months has centred on roast chicken, with Coles reducing its price from $11 to $8, and Woolworths following with $7.90 roasted chooks.
Coles merchandising director Richard Pearson said Coles has focused on reducing the costs of items people buy all the time, including dishwashing powder, cheese, garlic bread, ice cream and frozen cut beans.
“These are items that our customers put in their baskets week in, week out, and `Every Day’ pricing means they don’t have to wait for weekly specials to buy the products they need,” Mr Pearson said.
When it comes to online shopping, Coles said it does charge more for some products, though more than 70 per cent of its online items are the same price as in store.
Woolworths’ online prices match what is in store.